Discounting of Bill
If the holder of the bill is in need of money before the due date of the bill, he can approach the bank for encashment of the bill by discounting it. The bank takes the bill deducts a small percentage as interest (called discount in this case) and advances the balance of the amount. This process of encashing the bill with the bank is called discounting the bill. The bank gets the amount from the drawee on the due date.