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Finance & Banking vocabulary · Trade Finance

Bill of exchange

Meaning in finance & banking, with examples

nounAdvanced term

In finance & banking, bill of exchange means: A written order from one party to another to pay a fixed amount to a named person, either on demand or on a set future date, used mainly in trade.

In Turkish: poliçe, kambiyo senedi

How it is used

Used in trade finance and commercial law. The drawer issues the bill, the drawee is asked to pay, and the payee receives the money. Once accepted by the drawee, the bill can be discounted at a bank for early cash. A bill payable on demand is a sight bill; one payable later is a usance or time bill. Americans often say 'draft'.

Example sentences

  1. The importer accepted a bill of exchange payable in 90 days.

  2. We discounted the accepted bill of exchange to improve our cash flow.

Common collocations

  • draw a bill of exchange
  • accept a bill of exchange
  • sight bill
  • usance bill
  • discount a bill
  • documentary collectionA trade payment method in which the exporter's bank sends the shipping documents to the importer's bank, which releases them only when the importer pays or accepts a bill of exchange.
  • letter of creditA bank's written promise to pay the seller in an international sale, provided that the seller presents the required documents, such as the bill of lading and invoice.
  • chequeA printed paper order that tells a bank to pay a stated amount from the writer's account to the person or company named on it.
  • trade financeBanking products that help importers and exporters pay and get paid safely, and that finance goods while they are produced, shipped or sold.

More terms: Trade Finance

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This page explains English vocabulary for learners. It is not financial advice.