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Definition
A bill of exchange is a signed, unconditional written order requiring the addressee to pay a specified sum to a named party on demand or at a fixed future date. It is a core trade finance instrument.
In plain terms
It is a formal IOU with a date attached. The holder can wait for payment or sell (discount) it to a bank for cash sooner, at a discount.
Why it matters for your company
Bills of exchange give exporters a fundable, enforceable payment promise. Discounting one converts a future receivable into cash today. See promissory note.
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