bank bills (1 Viewer)

[emm225]

can anyone please explain to me the concept of bank bills because my textbook doesn't outline it very clearly

 

[biggie walls]

short term debt finance, usually 90-180 days, business' use bank bills mostly to buy assets, with the banks guarantee that the assets will be paid for within the time period of the bank bill...

i.e. if the business does not pay for it, the bank will cover it and take it up with the business (most likely charging them a large fee for going over the time period)

 

[Dark Phoenix]

Factoring is the selling of a company's account receivable to another company for cash which is less than the principle value.

Factoring returns cash quickly to the business and improves its liquidity (short term debts) and cash flow. So the business does not have to wait for credit customer to pay their account.

 

[emm225]

thanks heaps for ur help