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. The discount factor, DF(T), is the factor by which a future cash flow must be multiplied in order to obtain the present value.rnIn the case where the only discount rate you have is not a zero-rate but an annually-compounded rate would use an annually-compounded discount factor.