Difference between commercial papers and commercial bills
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Commercial Paper
Commercial paper is a borrowing instrument that banks and other financial companies make use of to finance short-term investments. You can think of CP as an instrument to raise capital for a short time period, which is usually less than a year. It is a discounted instrument having a face value and a maturity value. These commercial papers have a rating that is indicative of their safety and security and reflects the confidence of the investors in these instruments.
In India, companies having a net worth of at least four crores are allowed to raise capital by issuing these commercial papers.
Commercial Bill
Commercial bills, as the name implies, are instruments issued by banks that finance invoices raised by a company. Suppose a company selling goods or products to another company is apprehensive about the payment or at least wishes to enhance the safety of his money can get commercial bills issued by banks. Banks issue advance payment in lieu of invoices that show sale of goods. This is an instrument that comes into effect only after a sale has taken place. This is an instrument used by banks to accept and/or discount the bills of a customer. Commercial bills are issued for financing needs of medium term.
Commercial paper is a borrowing instrument that banks and other financial companies make use of to finance short-term investments. You can think of CP as an instrument to raise capital for a short time period, which is usually less than a year. It is a discounted instrument having a face value and a maturity value. These commercial papers have a rating that is indicative of their safety and security and reflects the confidence of the investors in these instruments.
In India, companies having a net worth of at least four crores are allowed to raise capital by issuing these commercial papers.
Commercial Bill
Commercial bills, as the name implies, are instruments issued by banks that finance invoices raised by a company. Suppose a company selling goods or products to another company is apprehensive about the payment or at least wishes to enhance the safety of his money can get commercial bills issued by banks. Banks issue advance payment in lieu of invoices that show sale of goods. This is an instrument that comes into effect only after a sale has taken place. This is an instrument used by banks to accept and/or discount the bills of a customer. Commercial bills are issued for financing needs of medium term.
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commercial papers is an unsecured short term loan used by corporation, typically for financing accounts receivable and inventories.
Add to commercial dictionary is sold at discount with the difference between the price and the value at maturity comprising the return to the investor.
Commercial bills are simply the objects that hold a double coincidence of value .
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