By definition, discounting is a method that is used to finance receivables by discounting or selling them. The financier deducts the interest from the maturity value of the note and then gives the proceeds to the receivable holder, who then endorses the receivables note and delivers it to the bank. Discounting is the act of determining the present value of future cash flows. In other words, it determines how much less tomorrow’s dollar is worth since one dollar today is worth more than one dollar tomorrow.