Retiring of Bill

A process of payment of bill before due date by drawee against rebate is called retiring of bill.

Retiring a bill means that making payment before the date of maturity. once the acceptor of a bill is prepared to form the payment of the bill before the due date, he could ask the holder to simply accept the payment, provided he receives some rebate or discount for the unexpired  period. Such a rebate or discount is an expense to the party receiving the payment and gain to the party making the payment.

Sometimes the acceptor of a bill of exchange desires to satisfy the bill before its maturity if he has sufficient funds at his disposal. He could raise the holder of the bill to simply accept the payment before the maturity. If the holder agrees to his proposal (obviously he welcomes it), he can withdrew the bill. Such a withdrawal is termed "retirement of a bill of exchange". The holder generally permits the acceptor a rebate or discount for the unexpired  period of the bill. This rebate is discount is an expense for the holder and a revenue for the acceptor of the bill. The accounting treatment is similar to cash discount.