Bill of exchange


A bill of exchange is a collection document where the payment of a certain amount of money is ordered on the due date. It is used as a means of payment and financial guarantee.

The bill of exchange is a commercial document that is generally used by a seller to guarantee the payment of the sale made and that has certain characteristics and peculiarities. Through the bill of exchange, the seller can finance his clients with the guarantee that he will collect the money on the due date.

Uses of the bill of exchange

The bill of exchange can be used for the following purposes:

  • Guarantee of payment of the credits granted: It can be used to grant financing with guarantee. If the payment is not fulfilled, the beneficiary can protest the document in court.
  • Payment method: It can be used as a payment method to facilitate purchase and sale transactions.

Characteristics of the bill of exchange

For a bill of exchange to be legally valid, the document must meet at least the following characteristics:

  • Specify the place of issue.
  • Denomination of the currency in which it has been issued.
  • Amount in letters and numbers.
  • Date the document was issued.
  • Due date.
  • Issuer data (Drawer).
  • Address of the bank where the payment will be made (not mandatory).
  • Data of the person who must make the payment (drawee).
  • Explicit acceptance of the one who must make the payment.
  • Signature of the issuer of the bill of exchange.
  • Stamp duty rate.
  • Identification of the document used for its completion.

Difference between bills of exchange and other financial instruments

Although the bill of exchange is a means of payment like other financial instruments, it has some special characteristics, among which are:

  • It is issued by the creditor or beneficiary.
  • It requires the explicit acceptance of the debtor, which is not the case with other financial instruments.
  • It allows you to set interest at the time of payment, something that does not happen with the check, for example.
  • It is a credit and not a demand payment.

Difference between bill of exchange and promissory note

We explain the main differences between a bill of exchange and a promissory note:

  • Issuer: The issuer of a bill of exchange is the person or company that has the right to collect. In the case of promissory notes, the issuer agrees to make a certain payment.
  • Participants: In the case of the bill of exchange there are three investors. The holder who is the one who has the right of collection, the drawer who is the one who issues the bill of exchange and the drawee is the one who assumes the debt. In the case of the promissory note, there are two participants, the beneficiary who has the right to collect and the signer, who is the one who issues the promissory note and assumes the payment obligation.
  • Type of document: The bill of exchange is an official document that is stamped by the State and the promissory note is a private document signed between two parties.
  • Interest: The bill of exchange does not carry interest while the promissory note can include it.
  • Acceptance: In the case of the bill of exchange, the debtor must accept it and the promissory note does not require any type of confirmation.

Sample bill of exchange

Here is a graphic example in which you can see the format and how to fill out a bill of exchange:

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