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Home / Finance / Banking / What is cheque discounting?
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What is cheque discounting?

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0 2022-09-07T19:44:17+00:00

Hey,

In the business world, cheque discounting is an easy way for companies to get the cash they require quickly. It’s a process where a bank or other financial institution will purchase cheques from businesses and then collect payment for those cheques from the customers (original payers) over a specific period of time.

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Now you know what is cheque discounting

Advantages of Cheque Discounting

Cheque discounting can be a great option for both customers and businesses as it gives it offers customers the ability to make purchases with their debit/credit card and businesses a secure and easy way to access funds without waiting for any payment to come in. It is a better option than traditional lending options as they take weeks or months before they fund, which could affect the growth of the business.

Disadvantages of Cheque Discounting

The biggest issue with cheque discounting is that businesses will generally receive less than the amount they have mentioned on their cheque, meaning they could end up paying more in interest than they were anticipating. Moreover, the interest rate can also vary from bank to bank and it also depends upon the size of your cheques and what kind of business you are in. If you aren’t careful, your company may end up paying a lot for availing cheque discounting services.

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I hope you liked my answer on what is cheque discounting.

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