It gives a unique option for small businesses to increase the amount of financing that they get, by utilizing the regular and loyal customers that they have built up. Bill discounting utilizes the receivables or debtors on the balance sheet on the books of the small business, and further release the same working capital to the small business on the back of the payments which are due by customers to the business.
Small business often sells goods and services to large corporations and blue-chip companies, they pay them 30 to 60 or at times even 90 days later. Bill discounting simply gives an upfront allocation of cash to the business owner against the promise that the customer will make a payment within the predefined credit period.