Bill or receipt discounting is an exchange action in which the dealer gets sum ahead of time at limited rates from the bank. This causes purchasers to contribute as loan cost in expanding the income of the monetary establishments, banks, or NBFCs in type of revenue paid and from month to month expense.
For instance: You have offered products to Mr. X, he has given you a letter of credit from bank of 30 days, if you need to get cash from the bank before 30 days, the bank will charge some loan cost from you, which consequently will be called as markdown for the dealer. How about we expect if the sum which you should get was Rs. 1 lakh on or following 30 days, by bank's rebate or loan fee of Rs. 50,000 you currently get Rs. 95,000 consequently structure the bank. The purchaser will in any case store Rs. 1 lakh to the particular bank on the 30th day in particular.
This exchanging of monetary interaction is named as bill discounting or receipt discounting.