Shipping Documents

Bill of Exchange (B/E) – Purpose & Key Fields

Written order to pay a specified sum on demand or at a future date. What the Bill of Exchange is for, who issues it, and its key fields.

Document: Bill of Exchange
Abbreviation: B/E
Transport modes: Sea, Air, Road, Rail, Multimodal
Issued by: Seller/Exporter, Drawer

Written order to pay a specified sum on demand or at a future date.

A Bill of Exchange (also called Draft) is a written order from the drawer (seller) to the drawee (buyer) to pay a specified sum either on demand (sight draft) or at a future date (time/usance draft). In documentary collections, the bill of exchange is presented with shipping documents through banks. It is a negotiable instrument that can be endorsed and transferred.

Purpose of the Bill of Exchange

Payment instruction in documentary collections
Negotiable financial instrument
Defines payment terms (sight or usance)
Can be used to obtain trade finance

Who issues the Bill of Exchange

Seller/Exporter
Drawer

When the Bill of Exchange is required

Documentary collections (D/P, D/A)
LC transactions
Trade finance

Key fields on the Bill of Exchange

Drawer (required): Party issuing the draft (seller)
Drawee (required): Party to pay (buyer)
Payee (required): Party to receive payment
Amount (required): Sum to be paid
Tenor (required): At sight or days after sight/date
Date and Place (required): Where and when drawn

Tips for the Bill of Exchange

Verify tenor matches payment agreement
Ensure amount matches invoice exactly
Keep track of acceptance and maturity dates

Frequently asked questions

What is a Bill of Exchange?

Written order to pay a specified sum on demand or at a future date.

What is the purpose of the Bill of Exchange?

Payment instruction in documentary collections. Negotiable financial instrument. Defines payment terms (sight or usance). Can be used to obtain trade finance

Who issues the Bill of Exchange?

The Bill of Exchange is issued by: Seller/Exporter, Drawer.