What is the difference between discounting and negotiation

Is this discrepancy? Partial shipment allowed. Presentation of invoice for goods A and B while bill of lading shows a description of goods as A,B and C. I am very confused about these cases. Look forward to hearing from you soon. Best regards,. Your email address will not be published. I know …. October 26, Contact.

Please clarify. Kind regards, Mr. Old Man. January 22, January 18, December 30, December 13, December 5, December 3, November 30, November 29, November 27, November 26, November 22, Need a clarification on transferable LC regarding clause 42C. November 18, Difference between bill discounting and bill negotiation.

How to distinguish export bill discounting and export bill negotiation. Are export bill negotiation and export bill discounting same? In simple terms, export bill discounting with banks takes place under the shipments where in no Letter of credit is involved.

The term export bill negotiation arises when the shipments under Letter of credit basis. Once after completion of necessary export procedures and formalities the exporter prepares necessary documents to send to his overseas buyer to take delivery of cargo. This documents includes Commercial invoice, Packing list, certificate of origin, Bill of lading or Airway bill, bill of exchange, quality certificate, and other documents specifically mentioned by the buyer at the time of placing purchase order.

If the shipment is under LC terms, exporter has to pay top most attention while preparing documents in order to meet all necessary requirements under the terms of Letter of credit. After preparing such shipping documents, exporter submits all documents with his authorized dealer bank.

Once after realizing amount from overseas buyer, the bank takes back the discounted amount after debiting necessary bank interest to exporter.

Through this above discussion, you may notice that bill discounting and bill negotiation are carried out differently and used in different conditions. However, the end purpose, i. In the case of bill discounting, you can approach any platform to sell your accounts receivables for securing a cash advance. It is mostly because bill negotiation is backed by a Letter of Credit. Both bills discounting and bill negotiation helps to release capital tied in invoices.

However, the process involved and terms of usage vary significantly in both cases. This is why, even if some may use the terms interchangeably, they are quite distinct.

Exporters ought to be smart about which option to avail at what time to meet liquidity crises more efficiently. Skip to content. Check out the section below to find more about it!