We explain what a bill of exchange is .
Learn how to account for bills of exchange receivable and payable.
Companies must seek formulas to ensure the collection of their commercial credits . Or at least, try to minimize the risk of non-payment .
The bill of exchange is a denmark email list commercial document that, together with promissory notes, constitutes one of the safest and most widely used formulas for guaranteeing payment for a credit sale.
In addition, bills of exchange can also be used to obtain credit, as they are means of payment that can be discounted at financial institutions to advance their amount before maturity.
When recording a bill of exchange, it is necessary to differentiate between bills of exchange to be collected or bills of exchange to be paid.
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What is a bill of exchange?
According to the Bank of Spain, a bill of exchange is a mandate by which the person issuing the document (drawer) orders the drawee to pay a sum of money on a specific date (due date) and in favor of a third party, whose name must appear on the bill.
The security of a bill of exchange lies in the fact that, if payment is not made upon maturity, the beneficiary can challenge the document in court.
A bill of exchange requires the explicit acceptance of the debtor, which is not the case with other financial instruments.
A bill of exchange involves the issuer, the drawee and the beneficiary and, in some cases, the endorser, the endorsee and the guarantor may also be involved.
Who is involved in a bill of exchange?
A bill of exchange involves, at least, the following parties:
Drawer or issuer . Person (natural or legal) who issues the bill of exchange. That is, the person who draws up the document and gives the payment order.
Drawn or issued . It is the person who accepts the payment order and, therefore, undertakes to pay the debt to the beneficiary.
Beneficiary or payee . This is the person who is ultimately paid. That is, the person who receives the money corresponding to the debt. This may coincide with the issuer, although this does not have to. It will depend on whether the bill has been endorsed or not.
