Differences between Factoring and Bill Discounting

Differences between Factoring and Bill Discounting

Though Factoring and bill discounting helps clients in different ways, there are certain difference between them as discussed here.

factoring vs bill discountingThis may be with or without . In Bill Discounting all the bills are with recourse to the i.e., if the drawee or buyer fails, the liability falls on the drawer.

1. Rights to give notice in Factoring vs Bill discounting: In factoring a factor always reserves the right to give notice and right to collect the money. The right to collect the money is given to the factor by the client. But in bills discounting, there is no notice of assignment given to the drawee of a bill.

2. Bill collection and payment in Factoring vs Bill discounting: In factoring, the factor collects the bill on his own. Whereas in bill discounting, the drawee of the bill makes payment to the banker on the due date.

3. Nature of factoring and bill discounting:Factoring is a service agreement as well as financing arrangement. Bill discounting is purely a financial arrangement of a short-term nature.

4. Undertaking of service in Factoring vs Bill discounting: The significant difference between factoring and bill discounting is the way services are undertaken.

In factoring, a Factor undertakes service, based on the quality of the debtor, his past record and his credit worthiness. Whereas the credit worthiness of the drawer with the banker is responsible for the bill discounting facility.

Leave a Reply




Recent Posts


Related pages


advantage and disadvantage of probability samplingrbi meaningcapital budgeting proposalsoverheads definition accountingunascertained goodsfund flow and cash flow analysisdefinition of operational auditdefinition of autocracyduties of the bailorecommerce vs ebusinessthe percent of sales method can be used to forecastdefinition of draweelimitations of financial ratiomerits of personal sellingcalculation of profitability indexdefinition overheadsred clause letter of creditmeaning of labour turnoverreasons for nationalisationwhat are the similarities between cost accounting and financial accountingfdi pros and cons in indiadebentures as a source of financecauses of rapid urbanisationmeaning of caveat in lawexplain scientific management theoryloan audit checklistdemotion definitioninflation definition by economiststhe role of financial intermediariesaccount payable turnover days formulasmall scale industries in uttar pradeshstaff turnover rate calculationbuyer beware caveatmarginal costing systemadvantages and disadvantages of variable costingimportance of departmental storecost allocation and apportionmentdefine authoritarian leadercharacteristics of zero based budgetingmeaning of securitisationstock turnover formulaadvantages of payback period methodabsorption costing problemsdumping economics definitionneoclassical theory of investmentsecuritization process in indiaexceptions to the doctrine of privity of contractcomputation of payback periodadvantages of collusive oligopolydefine draweewhat is departmentation in managementmeaning of equity shares and preference sharesauthoritarian leadership advantagesadvantages and disadvantages of npv methodmeaning of nationalised bank in indiaadvantages and disadvantages of a sole proprietorshipcredit control by rbitechniques of marginal costinginsurance regulatory development authority of indiasecured debenturewhat are the major differences between financial and managerial accountingpricing skimmingfactor price determinationadvantages and disadvantages of budgetingtypes of probability and nonprobability samplingbearer debenturesconstituency tamil meaningadvantages and disadvantages of bureaucracydisadvantages of leasing assetsauthoritative leadership definition