What Are The Major Advantages Of Bill Discounting India?

By Author: Marketfinanc
Total Articles: 3
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Bill discounting is popularly known as purchasing of bills. It is used to provide the working capital to the small and medium enterprises. Do you know about working capital? It is the cash flow required to meet the day to day expenses of any business. You can advance any sales bill from a business before it is actually due.

Bill discounting Companies handles the Bills receivable and bills payable which are generally referred to as “Bills of exchange” to be discounted immediately before the due date. It is really very helpful for the companies to manage funds when they don’t have enough cash and they are in need of urgent cash for their business, or to pay the employees or covering all the pending business expenses. Now, they don’t have to wait so long for two-three months for the invoice payment. Just with a little chargeable fee, they can immediately get the cash whenever needed by the business.

Now let me tell you about the functioning of Bill discounting. Here we go-

1. The business firms sell goods and services to the buyers and if buyers are unable to pay the money at the moment, then the seller ...
... or the firm raise an invoice for the customer or the buyer.

2. The invoice is popularly referred as the Bills of Exchange which is raised by the seller as bills receivable and accepted by the buyer as bills payable. The buyers usually agree to settle the invoice at an agreed date (normally 30 days, 60 days or 90 days).

3. Now, there are so many bill discounting companies out there. They offer the money before the due date that is referred to as Discounting of bills.

4. The financing companies evaluate the creditworthiness of the buyer who has to make payments against the bill, and the potential of the bill raised, and then the company basically calculates the risk of giving money in advance.

5. The funds are then released by the financing company and the fees are charged accordingly.

So far, we have seen the complete procedures of discounting of the bill, let me tell you about some basic advantages of Bill Discounting.

1) The working capital is increased by discounting and accordingly the cash flow of the business increases.

2) Discounting of bills is a very easy and simple process and modes do not consume so much of time and formalities as in the case of bank loan. The funds are released within 24 hours of the discounting. In short, it is very easy and quick to access.

3) The amount of limit which can be given in a bill discounting facility is usually much higher than an unsecured overdraft facility. In addition, the fees charged are usually lower than an overdraft or cash credit facility, and you only pay for finance as and when you require it.

Market Finance India Company offers Bill Discounting. They are one of the leading Financing companies. To know more about Bill Discounting India, please visit our website HERE: http://www.marketfinance.co.in/.