Question
Which of the following financial products is most commonly utilized by MSMEs to address short-term liquidity requirements and ensure the smooth functioning of day-to-day operations?
Solution
Bill Discounting is a common method used by MSMEs to manage short-term liquidity requirements . This process allows MSMEs to sell their receivables (i.e., outstanding invoices) to financial institutions in exchange for immediate cash. This helps businesses maintain cash flow without waiting for customers to pay their dues.
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