Advantages of Bill of Exchange

Bills of exchange are used frequently in business because of the following advantages:

• Framework for relationships — a bill provides an agreed framework for a credit transaction between the seller/creditor and the buyer/debtor.
• Certainty of terms and conditions — the creditor knows exactly when he will receive the money and the debtor knows exactly when he must pay, because the amount, date of payment, interest (if any) and place of payment are all clearly stated in the bill.
• Convenient means of credit — the buyer can buy on credit and pay at the end of the credit period, while the seller can still get immediate payment by discounting the bill with a bank or endorsing it to a third party.
• Conclusive proof — a bill is legal evidence of a credit transaction. If the buyer …