A bill of exchange is a financial document used in international trade transactions. It represents an unconditional order in writing by the exporter (drawer) to the importer (drawee) to pay a specified amount at a determined future date.
This negotiable instrument facilitates commerce by providing a secure method of payment. Once accepted by the drawee, the bill of exchange can be traded, allowing the exporter to obtain immediate funds.
It serves as a vital component in trade finance, reducing parties involved payment risks for parties involved in cross-border transactions.
