Discounting of bills of exchange is a financing transaction wherein a company remits an unexpired commercial Bill of exchange to the bank in Return for an advance of the amount of the bill, less Interest and fees. Depending on the accounting principles and the exact form of Discounting, this financing can be off or on Balance sheet.

(See Chapter 22 Shares of the Vernimmen)

To know more about it, look at what we have already written on this subject