Bill Discounting

Introduction

Get fast access to funds for your commodity business through our Bill Discounting facility. HDFC Bank offers customised solutions through a specialised trade finance team with extensive experience in meeting business requirements. You can also take advantage of our extensive branch network and correspondent banking relationships across the country.

Benefits of Bill Discounting

  • Following are the benefits of HDFC Bank’s Bill Discounting Facility:
  • Choose from a range of Bill Discounting options tailored to your short-term finance needs, spanning from the sale date to the payment receipt date.
  • For a commodity trader or broker, benefit from lower interest rate costs and eliminate the need for collateral when opting for Bill Discounting in banking.
  • Get more information on our Bill Discounting services for commodity businesses at prabhakar.bobde@hdfcbank.com or bhupinder.singh@hdfcbank.com or call us on 91-022-40804276.

Frequently Asked Questions

The main difference between a Letter of Credit (LC) and Bill Discounting is their nature and purpose in trade finance. A Letter of Credit is a payment assurance mechanism used in international trade, where the buyer's bank guarantees payment to the seller upon meeting the specified conditions. It involves three parties: the buyer, the seller, and their respective banks. On the other hand, the Bill Discounting facility is a financing method where a seller receives immediate funds by selling their trade receivables at a discount to a financial institution. Unlike an LC, Bill Discounting primarily involves the seller and the financial institution, helping the seller manage cash flow efficiently.

Invoice discounting offers several advantages to businesses. Firstly, it provides immediate access to cash, improving cash flow and allowing businesses to meet their financial obligations promptly. Secondly, it can be a flexible financing option, as the amount of funding can be adjusted based on the business's needs. Additionally, Invoice Discounting is a confidential arrangement, so customers may not be aware of the financing. This can help maintain good customer relationships. Lastly, Invoice Discounting is often quicker and simpler than traditional bank loans, making it an attractive option for businesses in need of fast funding.

Another name for Bill Discounting in banking is Invoice Discounting. It refers to a financial practice where a business sells its accounts receivable (invoices) to a third party (such as a bank) at a discount. This allows the business to receive immediate cash for the invoices, instead of waiting for customers to pay. The third party then collects the full amount from the customers when the invoices are due, earning a profit from the discount.

To apply for bill discounting, you can reach out to HDFC Bank through email at prabhakar.bobde@hdfcbank.com or bhupinder.singh@hdfcbank.com. Alternatively, you can contact them by phone at 91-022-40804276. By leveraging Bill Discounting facility, you can effectively manage your working capital and ensure smooth business operations.

Let's say a seller sells goods to a buyer on credit terms and receives a bill of exchange from the buyer as a promise to pay on a future date. The seller, needing immediate cash, can approach a bank or financial institution to discount the bill. The bank pays the seller the face value of the bill less a discount, which is the interest charged for the period until the bill matures. The bank then collects the full amount from the buyer when the bill matures, thus earning a profit from the discount.

Bill Discounting in banking, also known as Invoice Discounting, is a financial practice where a business sells its accounts receivable (invoices) to a third party (such as a bank) at a discount. This allows the business to receive immediate cash for the invoices, instead of waiting for customers to pay. The third party then collects the full amount from the customers when the invoices are due, earning a profit from the discount.