A Guide to the Use of Cheque Discounting as a Robust Trade Finance Solution

Corporate finance in Dubai is an umbrella term comprising a wide range of facilities, which means you need to select the right financing solution as per your specific business requirement. For instance, companies opt for cheque discounting facilities in Dubai when they want liquidity access by discounting the cheques and crediting them into their account at the same time. Getting a cheque discounting facility through corporate finance companies in Dubai enables you to access cash for your business requirements while awaiting the clearance of cheques.

Cheque discounting facilities are more suitable for companies that require cash immediately. To be precise, it is an ideal fit for those who can’t wait longer for funds to appear in their bank account, and then access the bank to withdraw the amount deposited by cheque. However, you need to assess your business situation and requirements before availing of cheque discounting services in Dubai. You need to see whether you are eligible for the facility, how you can obtain it and what it takes you to get such a facility without much hassle.

You can seek the advice of corporate finance firms in Dubai to understand the key requirements. Furthermore, the article given below will tell you why cheque discounting is a robust trade finance facility in Dubai:

Cheque Discounting Facility: What is It?

In a cheque discounting service, a bank or financial institution will enable you to receive funds against a cheque without waiting for it to be cleared. Cheque discounting services in Dubai are mainly availed by business clients and individuals who get paid in the form of cheques by reputable institutions with a need for instant liquidity. The banks will pay such clients against the uncleared cheques. The banks will typically charge interest on the withdrawn amount. It may sometimes involve a service fee which may vary from bank to bank. If your business is in need of a cheque discounting facility, talk to the best corporate finance firms in Dubai.

What are the Requirements for Cheque Discounting?

Before applying for cheque discounting facilities in Dubai, you need to check whether you meet the requirements set out by the financial institution. It is advisable to consult with corporate finance companies in Dubai to ensure you are eligible for a cheque discounting facility. Some of the key requirements are listed below:

  • The cheque must be drawn from reputed institutions or organisations where the drawer has no previous delinquent cheques
  • The customer requesting the discount must have a previous record of receiving a cheque from the same drawer
  • Personal cheques, related entity’s cheques and foreign currency cheques may not be eligible for cheque discounting

How does Cheque Discounting Work?

The terms and conditions set out for availing cheque discounting facilities in Dubai may from bank to bank. Such terms and conditions are created to safeguard the lenders from the risks involved. You need to check the terms before deciding to use cheque discounting services in Dubai. You can have more clarity on the conditions by consulting with corporate finance companies in Dubai. Read the following to understand how the facility works:

  • The bank or the financial institution will receive the payment on the cheque on the due date from the customer the client. This means one has to be a creditworthy customer to access cheque discounting services in Dubai and the cheque should not be dated later than 90 days from the day of the discounting.
  • Carry out a detailed check on the cheque to avoid any bounced cheque. The banks may immediately credit the value of the cheque to the account holder.
  • Depending on your creditworthiness, the bank may credit up to 75% to 80% of the cheque value

Benefits of Using Cheque Discounting Facilities in Dubai

By availing of cheque discounting facilities in Dubai, you may access the following major benefits:

  • Cheque discounting facilities allow you to improve your company’s cash conversion cycle
  • A cheque discounting facility injects liquidity to finance your company’s expansion plans
  • It makes your company capable of making further investments
  • Using a cheque discounting facility in Dubai strengthens your bargaining position with regard to suppliers
  • It helps you to ensure the continuous flow of your company’s working capital
  • A cheque discounting facility is a more flexible and affordable form of corporate finance in Dubai

Consult with the Best Corporate Finance Companies in Dubai, UAE

Businesses can’t wait for their cheques to clear when they need immediate cash but corporate finance companies in Dubai can help them by offering cash discount facilities. When it comes to corporate finance services in Dubai, Jitendra Chartered Accountants (JCA) leads the pack with bespoke services such as Letter of Credit, Bank Overdraft, Trust Receipt, Bank Guarantee, Project Finance, Invoice Discounting etc. Access our services to secure hassle-free financing for your business.