Question
How does factoring differ from bill discounting as a
method of financing for MSMEs?   ÂSolution
Factoring is a process in which MSMEs sell their accounts receivable (invoices) to a third party (factor) in exchange for immediate cash. Bill discounting , on the other hand, is when an MSME obtains a short-term loan by pledging their receivables, without selling them outright.
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