In Africa, bill discounting is called as such because it's an arrangement whereby the seller recovers an amount of sales bill from the financial intermediaries before due date and this type of discounting generates additional working capital finance for the seller of goods.
For Africa, in a export transaction, an export bill discounting means that a bank buys from the exporter the undue time draft avalosed by banks or the undue debt claim honored by banks under an export L/C, or the undue debt claim guaranteed by banks under the documentary collection.
They are two types of draft discounting:
Accepted draft discounting: it means that the bearer of the acceptance draft sells the draft to a commercial bank for an amount of funds before its maturity. The discounting bank takes the risk of the buyer (obligor) to pay at maturity and therefore assume the corporate risk.
Avalised Draft Discounting: this approach reminds the discounting of an accepted draft but the exporter requires the buyer’s bank to add its guarantee (avalisation) to this draft. In this case the risk transfers to the avalising bank and the seller's bank discounts the payment risk of the avalising bank without recourse to the underlying seller.
TRADEFINANCE.AFRICA COUNTRIES OF EXPERTISE
LC FEE AND CHARGE UCP 600 TEXT LC DISCOUNT BACK TO BACK LC STANBY LETTER OF CREDIT DOCUMENTARY COLLECTION BILL DISCOUNTING PROMISSORY NOTE DISCOUNTING BID BOND PERFORMANCE BOND ADVANCE PAYMENT BOND MAINTENANCE BOND ALGERIA ANGOLA BENIN BOTSWANA BURKINA FASO BURUNDI CABO VERDE CAMEROON CENTRAL AFRICAN REPUBLIC CHAD COMOROS DRC CONGO REPUBLIC OF THE CONGO IVORY COAST DJIBOUTI EGYPT EQUATORIAL GUINEA ERITREA SWAZILAND ESWATINI ETHIOPA GABON GAMBIA GHANA GUINEA BISSAU KENYA LESOTHO LIBERIA LIBYA MADAGASCAR MALAWI MALI MAURITANIA MAURITIUS MOROCCO MOZAMBIQUE NAMIBIA NIGER RWANDA SAO-TOME AND PRINCIPE SENEGAL SEYCHELLES SIERRA-LEONE SOMALIA SOUTH-AFRICA SOUTH-SUDAN TANZANIA NABIL FRIK ALGERIA TOGO TUNISIA UGANDA ZAMBIA ZIMBABWE GUINEA CONAKRY SUDAN NIGERIA BLOCKCHAIN TRADE FINANCE