The information provided here is part of Import Export Training course online
The role of bill of exchange in export business
How bill of exchange works in export trade? Are export sales under a bill of exchange safe for an exporter in a DA terms of payment?
What is a bill of exchange? How does Bill of Exchange function in Export and Import business?
In an international trade, bill of exchange is a negotiable instrument made by seller/exporter addressed to the buyer/importer.
Once after shipping goods, the required documents for import along with bill of exchange are submitted with exporter’s bank to send to foreign buyer through buyer’s bank. The said bill of exchange draws in duplicate as per specified format.
Bill of exchange contains the reference details of shipment, amount of invoice to be receivable from overseas buyer, the time of payment to be effected, bank details etc. A sample body structure of a bill of exchange is as follows:
"On 60 days from the date of bill of lading, please pay an amount of USD 0000 to this first of exchange (second of exchange unpaid), to the order of xyz bank against invoice number 0000. To: xyz bank "
The bill of exchange is drawn on the letter head of exporter and signs under and sends to buyer through his bank. Once after reaching documents to overseas buyer, he accepts bill of exchange by signing on bill of exchange. On maturity date of bill of exchange, the buyer effects amount of proceeds to the supplier of goods through his bank. I have written a detailed article about Bill of Exchange in simple terms to make you easily understand,you can click here to read – Bill of Exchange, a brief tutorial.
The legal strength of bill of exchange in international trade under DA terms of payment has to be discussed with the experience of traders, as I personally have no recommendations on this mechanism. Also read Export bills discounting formalities. Negotiation procedures and formalities of export bills
Do you wish to add more information about the mechanism of bill of exchange in Export Import trade of International Business? Share your experience in handling Bill of Exchange in Export Import trade.
Comment below your thoughts and discuss about functions of Bill of Exchange in Export and Import trade of International Business.
The above information is a part of Online Training Course on howtoexportimport
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