Compounding vs. Discounting

Compoundingnoun

An accumulation of compound interest.

Compoundingnoun

the act of combining things.

Compoundingnoun

the act of combining things to form a new whole

Compounding

In the field of pharmacy, compounding (performed in compounding pharmacies) is preparation of a custom formulation of a medication to fit a unique need of a patient which cannot be met with commercially available products. This may be done for medical reasons, such as to be administered by a different route (ex: tablet to liquid), to avoid a non-active ingredient that the patient is allergic to, or to provide an exact dose that isn't commercially available.

Discounting

Discounting is a financial mechanism in which a debtor obtains the right to delay payments to a creditor, for a defined period of time, in exchange for a charge or fee. Essentially, the party that owes money in the present purchases the right to delay the payment until some future date.