Bill discounting

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Prachi (Querist)
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12 August 2012 Hi Experts,

Can anyone explain me the difference between BILL DISCOUNTING, BANK GUARANTEE, LETTER OF CREDIT. how is works?

Thanks
Prachi

Nachiket Vasantgadkar

Nachiket Vasantgadkar (Expert)
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13 August 2012 Bill Discounting: Customer pay through bill which can be discounted with your bankers for immediate receipt of amount. This is a negotiable instrument from your customer or to your vendors

Bank Guarantee: Guarantee issued by your bankers on your behalf. If you fail to perform then your vendor/opp party can approach bankers. This is Guarantee on your behalf by bankers. Bank charge you commission for this.

LOC: This letter is issued by bankers of your customers. You can issue LOC to your vendors. On due date of invoice bankers of customer pay to vendor the amount due. For this conditiones agreed and mentioned in LOC should be fulfilled.