The discount of bills is a financial operation that generally consists of anticipating the liquidity of a debt belonging to a company, which has not yet been collected. The discount will symbolize all debt in favor of a company subject to a deferral in its payment. So, if a company is in this case, and needs money immediately, it can resort to discounting.
Types of bill of exchange discounts
There are several types of bill of exchange discounts. Its classification is as follows:
- Bank discount: when the anticipated title is a bill of exchange. This can be divided into two sections: commercial or financial discount. The first is when the bills constituting the bank discount come mainly from the provision of a regular service of the company requesting the advance or transferor company. And the financial discount consists of when the letters are part of a loan that had been granted by a bank.
- Non-exchange discount: this discount is made up of any other title or collection right that is not a bill of exchange (receipts, bills…)
On the other hand, there are two ways to discount bills. They will differ by interest rate to which they are provided, depending on the term of the advance to which the operation is subject. We have the traditional discount, subject to a variable interest that is based on the days to which the advance is subject, taking into account the due date in question. And then we have the "ski pass" discount. It consists of a discount to which the fixed interest is deducted but, unlike the traditional discount, the advance payment period is not taken into account, nor the expiration date. Banks set a fixed interest for the use of this service.