Prefinance of financial documents (for example an invoice) under usual reserve which are due in the future. Discounting is with recourse: if the bank is not able to recover the funds at maturity, banks client (beneficiary) will be debited again.
Under a Trade Finance transaction buyer agreed with seller settlement in the future. Seller however needs immediate disposal of the invoice amount and agrees with his bank discounting. Seller’s bank pays instantly and is responsible for collecting the amount in the future from the buyer. If funds uncollectible, seller have to refund to his bank.