Mastering Bill Discounting: A Comprehensive Accounting SOP

Indeed, bill discounting is a powerful tool for manufacturers to maintain liquidity, especially when dealing with large OEMs like Tata Motors or Maruti. However, the accounting treatment for these transactions often causes confusion among professionals. In this guide, we break down the two most effective methods to record bill discounting entries in Finsys ERP, Tally, or any standard accounting software.

Method 1: The Direct Party Credit (Simple Approach)

Initially, many companies choose the simplest route. Specifically, when the bank or NBFC discounts the bill, the entry is made directly against the customer’s ledger. Bill Discounting Accounting Treatment

The Accounting Entry:

• Bank A/c: Debit (Net amount received)

• Discounting Charges: Debit (Expense)

• To Customer A/c (e.g., Tata Motors): Credit (Full Invoice Value)

Admittedly, this method is easy to execute. But, it has a major disadvantage: Reconciliation Problems. Because the customer’s books still show the full amount as payable while your books show it as cleared, your ledger will never match theirs. Therefore, this is only recommended if you do not perform frequent balance confirmations.

Method 2: The Liability/Hundi Approach (Recommended)

On the other hand, for better control and audit compliance, we recommend the “Hundi” or Liability method. To clarify, this approach keeps the customer’s ledger intact while creating a temporary liability for the funds received. Bill Discounting Accounting Treatment

Step 1: On Receipt of Funds

• Bank A/c: Debit

• Bill Discounting Charges: Debit

• To Bill Discounting Liability A/c (Series 16 or 06): Credit

Step 2: On Actual Payment by Customer to Bank

• Bill Discounting Liability A/c: Debit

• To Customer A/c: Credit (Knocking off the original invoice)

Why Method 2 is Superior for MSMEs:

1. Correct Reconciliations: Your customer’s ledger always matches their records.

2. Bank DP Accuracy: You avoid “Double Financing” risks by clearly showing what is a trade receivable and what is a loan.

3. Better Follow-ups: Your marketing team can still see the full outstanding amount, ensuring they don’t lose sight of pending collections.

3. Impact on Balance Sheets and MIS

Ultimately, how you present this in your Balance Sheet depends on your preference for transparency. Notably, some companies prefer to show the discounting amount as a Secured Loan (Series 03), while others prefer to show it as a negative figure under Sundry Debtors (Series 16) to reflect the “Net Debtors.”

In addition, Finsys ERP provides a “Click-to-Go” report that tracks every bill’s age and discounting status. Consequently, you can monitor your Hundi completion and Hundi creation cycles in real-time.

Conclusion: Choose Accuracy Over Simplicity

To conclude, while Method 1 is faster, Method 2 provides the structural integrity required for a growing manufacturing business. By adopting a systematic SOP for bill discounting, you ensure that your Accounts, Marketing, and Bank Compliance teams are all on the same page.

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Travel Packing List

(Suggested for Finsys Male Members, by Admin Dept)

Suggestions

Dear Members, as suggested in the last Saturday meeting, the suggested Travel Packing List is as follows. Hope it will be useful and a ready referencer for all
Business Travel Packing List for ERP Consultants

Documents : International only

Passport, with at least 6 months validity,

There should be no cutting/any marking on the Passport except by the Government .

Visa for the required country,

Health insurance card / Travel insurance

RTPCR Test Report / See the country guidelines, Emirates click here

Country specific Electricity Adapter / Multiplug

Business Travel Packing List for ERP Consultants

Documents : Domestic + all travel

Any Valid Photo Id proof for showing at Airport and Hotels etc like Driving Licence,

Web-checkin done ?

2nd copy of the Ticket on phone

Tickets for airline, train, bus

Hotel Voucher

Boarding pass

List of medications, and doctor’s prescription

Travel aids

Suitcases, backpack
Travel locks
Luggage tags,
Pens and paper
Snacks, drinks, Laptop bag,

Financial

Foreign currency ( international )
Indian Currency,

Money in small notes, Credit card, debit card
Extra wallet
Money in Socks (for emergency situations)

Appliances

Cellphone,

Cellphone charger,

Laptop,+ Laptop chargers
Travel adapter and converter

Power Extension board, if required

Headphones / Ear-phones

Clothes

Shirts : Formal

Shirt / T Shirt, Informal

Pants/ Trousers:Formal

Jeans / informal lowers

Under Garments
Socks
Sleepwear
Shoes, slippers
Jackets, coats,
Belts, tie,

Toiletries

Toothbrush, Toothpaste,
Deodorant
Soap, shampoo, conditioner, if reqd
Shaving supplies
Skin products/Body oil,
Brush, comb, hairproducts
Glasses, contact lenses, supplies

Health

Covid19 Masks, Medications, pain reliever,
First aid kit,
Insect repellent,
Covid19 Hand sanatizer/desinfectant (if reqd),

Headache, Fever Relief : Calpol / Crocin or equivalent

Throat Relief: Sualin by Hamdard, or Kanth-amrit by Patanjali,

General activities / Others

Food Packets / Biscuits / Haldiram ready to eat food packets,

1 small juice packing,

1 small water bottle,

Gifts, if applicable,

Prayer Books, ( Yes, Ishwar is your friend… he helps you always),

General Reading books, if you like,

Before you go  – Communication

Given your two Family phone numbers to HR dept ?

Taken At least Two Phone numbers of the people you have to meet ?

Spoken to them ? Got their Confirmation ?

Taken Name & Address of the location you have to go to ? Taken Google Location also ?

Before you go  – Backups

Taken Backup of your Computer(Laptop), before you go ? Must do

Uploaded on the Onedrive / Given to Modi Sir / IT Team ?

Hope you liked Travel Packing List – For Finsys ERP Team – Domestic and Foreign.  Initiative for Finsys Team members

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