Bill Discounting vs Bill Negotiation

1. Bill Discounting vs Bill Negotiation Simple | Fast | Reliable

2. Bill Discounting It is a trading activity that allows sellers to raise funds against unpaid invoices. In this process, an exporter approaches a bill discounting platform to trade bills at a discounted rate. Usually, reputed fintech companies like KredX take 24 hours to 72 hours* to disburse cash against the invoices. With the help of availed funds, exporters can replenish their working capital. On maturity, the exporter is required to collect payment from customers. The exporter does not lose his/her control over the company’s sales ledger through this process. Plus, he/she can keep this entire agreement confidential since the customer is kept out of this set-up until the end.

3. Bill Negotiation These pointers elucidate export bill negotiation in brief – Typically, bill negotiation denotes that, after shipment, export documents are negotiated at a banking counter to draw out a facility. • The exporter prepares essential documents. • Once shipment documents are ready, they are submitted to the exporter’s financial institution. • The financial institution verifies whether all the terms and conditions of the letter are met and then proceeds to negotiate the bills of export. • The invoice amount is credited to the exporter’s account after bills are negotiated. • Once the amount of the overseas buyers realised, the financial institution takes the discounted amount back after deducting the applicable interest amount.

4. Differences: Unlike bill negotiation, the process of bill discounting is quite relaxed and is not necessarily carried out as per stringent agreements of any LC or DA/DP. Low-Cost Payment Processing clean bills are ideally negotiated and then credited to the exporter’s account only after it is accepted by the bank that issued the Letter of Credit in question. In the case of bill discounting, you can approach any platform to sell your accounts receivables for securing a cash advance. Bill negotiation is considered a relatively less risky trade product from financiers’ perspective than bill discounting.

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