When a bill is negotiated to a bank, it is said be?

When a bill is negotiated to a bank, it is said to be discounted. Discounting refers to the process of a bank buying a bill of exchange (such as a check or promissory note) from the holder before its due date and paying them less than the face value of the bill. In this process, the bank becomes the new holder of the bill and is entitled to receive the full face value of the bill from the borrower when it becomes due. For example, if a company has a $1,000 bill due in 60 days, a bank may offer to buy the bill for $980 today. The company can then use the $980 to cover its immediate expenses and the bank will wait for 60 days to receive the full $1,000 from the borrower when the bill is due. In simple terms, discounting is a way for companies to obtain cash before their bills are due, and for banks to earn a profit by charging a fee (the difference between the face value of the bill and the amount they paid to buy it).