What is Bill of Exchange? Characteristics, features and meaning

Short-term loans are considered as a popular loan method chosen by many people today. When it is time to pay, the debtor will receive a refund order and should be responsible for proceeding according to the previous agreements. This is known as a bill of exchange or bill of exchange. The article will provide information about what bill of exchange is, its characteristics, features and meaning.

1. What is Bill of exchange?

Bill of exchange or bill of exchange is a short-term loan, reflected in writing, where the beneficiary is entitled to demand payment from the issuer for a specific amount and the borrower must repay the money after receiving the bill of exchange. vouchers from creditors.

When the bank agrees and endorses it, the bill of exchange has the ability to discount or negotiate the same lower price and in addition, the interest rate is also shorter than the market.

Normally, the longest term of a bill of exchange is half a year and is commonly used in trade finance or capital mobility in economic sectors, mostly in the public-agricultural sectors. There are two forms of domestic bills of exchange for the domestic market and foreign bills of exchange for transactions abroad.

What is the concept of bill of exchange?
What is the concept of bill of exchange?

2. What are the characteristics of Bill of exchange?


The borrower must pay the money in accordance with the requirements shown in this document, not having the right to give any cause for delay or to disagree with the request of the beneficiary or the lender of the money. . In the event that a bill of exchange is not required by law, the borrower is not required to comply with the requested requirements.


On the way to write the bill of exchange, the writer does not have to specify the reason why, but only needs to write down the content related to the refund or the amount of debt to be paid. The relevant legal constraints also do not require reasons for the need for a bill of exchange. In general, the borrower’s obligation to pay money is abstract.

Traffic calculation

At a specific time, the bill of exchange has the right to be transferred many times because it is an order to take money from the debtor.

Features of bills of exchange
Features of bills of exchange

3. Functions of bill of exchange:

A bill of exchange has three functions:

A bill of exchange is considered a method of payment: a bill of exchange is a way to assist the seller to claim money from the buyer and to assist the depositor to pay debts to the seller.

Bill of exchange is a way to secure: this is considered a valuable document so it can be traded, mortgaged, pledged, …

A bill of exchange is a means of providing credit: because a bill of exchange is a valuable document, it can potentially be an effective tool in making commercial and bank credits.

4. What is the meaning of bill of exchange?

Bill of exchange is a widely used payment method in import and export and is often associated with international payment methods such as L/C or collection entrustment.

In addition, drafts are used as a way to store credit information when the bill of exchange is discounted at a bank or when it is being circulated from one person to another. If still valid, this is considered a commodity traded in the financial market.

5. Entities participating in the bill of exchange

Drawer: The seller, the exporter or the representative of the enterprise providing services, exporting, etc.

Drawee (drawee): The party to pay if the draft is sent and there is a demand for payment.

Beneficiary (beneficiary): is the party receiving according to the requirements on the paper, so receive back the payment amount in the draft.

Endorser: A party that transfers the right to hold a bill of exchange to another by giving or signing.

Acceptor: The person who draws and is responsible for paying the bill of exchange if it is due.

Holder or bearer: A person who is likely to receive a bill of exchange if paid.