What Is Bill Discounting?

Bill discounting is a financial service that allows businesses to access immediate cash by selling their outstanding invoices or bills to a financial institution at a discount. This service helps businesses maintain cash flow by converting accounts receivable into instant funds, without waiting for the payment due date.

Key Facts about Bill Discounting

Instant Cash Flow: Bill discounting gives companies access to working cash right away, enhancing liquidity and facilitating efficient operations.

No Collateral Required: Typically, no additional collateral is required, as the invoices themselves serve as security.

Short-Term Financing: It is a short-term financing option, usually linked to the credit period of the invoices, typically ranging from 30 to 90 days.

Bill Discounting Eligibility Criteria

Credible Invoices: The business must have genuine and verifiable invoices from creditworthy customers.

Business Stability: Financial institutions prefer businesses with a stable financial history and consistent cash flow.