Compounding vs. Discounting

Compoundingnoun

An accumulation of compound interest.

‘the number of compoundings per year’;

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.

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.