Definition of Document Discount

It is called discount of documents to that valuation account that represents unearned interest that is included in the nominal value of a certain document to be collected.

A document discount is a type of valuation account, which has the ability to reflect interest that has not been earned on a document that must be collected. This type of valuation can be amortized over time as interest income.

In certain banking areas there are usually certain documents such as promissory notes or some type of receipt that entail a maturity and that, therefore, imply a difficulty since, due to their high cost, their payment can be prolonged in time, harming the person involved.
In order to avoid this inconvenience, it has been known to create the call discount line. This operation financial allow the Bank advance payment of discounts, at the same time obtaining a commission for doing it. If the payment guarantee is high, the commission of risk is reduced.

However, an individual or physical entity may not be accepted to benefit from the document discount for various reasons. Either the document may be damaged or it may be a counterfeit copy, or the discount limit will be has exceeded and a certain number of documents must be canceled in order to access new amounts in discount. It may also happen that the operation is considered doubtful

legality (for suspicions of money laundering, money laundering or tax evasion). And finally, the person who paid the payment can be found on a list of defaulters that removes the possibility of receiving a discount.
In any case, the bank reserves the right whether or not to provide this document discount service, or to grant it under the conditions it deems appropriate.

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