Bill of Exchange Format

Download the Bill of Exchange Format for your client. Also use Vyapar App to do billing, inventory, and accounting easily and grow your business faster. Avail 15 Days Free Trial Now!

Define Bill of Exchange
Define Bill of Exchange

Download the Bill of Exchange Format for your client. Also use Vyapar App to do billing, inventory, and accounting easily and grow your business faster. Avail 15 Days Free Trial Now!

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What is a Bill of Exchange?

A bill of exchange format is used to create a bill of exchange which acts as an instrument in writing signed by a maker used in international trade. It contains an unconditional order directing a certain person to pay a certain sum to a particular person or the instrument bearer. Bills of exchange are similar to cheques and promissory notes.

The bill of exchange refers to the payment obligations of one commercial enterprise or individual that have been mutually agreed to between both parties. It is duly signed by the maker and contains payment terms with the exact date when the dues need to be fulfilled. It binds the parties involved in the transaction.

In international trade, a bill of exchange format is used to enable importers and exporters complete transactions. While a bill of exchange is not a contract in and of itself, the parties involved can use it to establish the parameters of a transaction, such as credit terms and accruing interest rates.

Parties of Bill of Exchange

Parties Bill of exchange

There are three parties involved in bills of exchange transactions. They are drawer, drawee, and payee.

Drawer

The drawer is the maker of a bill of exchange and the one who signs it. A creditor can also make a bill of exchange format when he is entitled to receive payment from the debtor.

Drawee

Bills of exchange are drawn on the drawee. Drawee is also an acceptor or debtor who accepts a bill of exchange and pays the money to the drawer. 

Payee

The payee is the person to whom the drawee makes the payment. A drawer himself can be the payee, or it can also be some third party.

Types of Bills of Exchange

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Inland Bill

An inland instrument is a bill of exchange drawn or made in India and payable or drawn upon any person resident in India. An inland bill is only payable in one country and not in any other country.

Two necessary conditions to make an inland bill are:

(1) the inland bill must have been drawn or made in India; and

(2) the inland bill must be payable in India, or the drawee must be in India.

For example, A bill drawn in India, payable in the USA, upon a person in India is an inland instrument. A bill drawn in India and payable in India but drawn on a person in the USA is also an inland instrument.

 

Trade Bill

A bill drawn and accepted for a genuine trade transaction is a trade bill. When a trader sells goods on credit, he may use a bill of exchange format. 

The seller signs and draws a trade bill that describes the trade activity. The buyer agrees to the terms and conditions specified in the bill.

 

Accommodation Bill

An accommodation bill is sponsored, drawn, and accepted without any conditions. It is a bill in which a person lends or gives his name to oblige a friend or someone he knows. In other words, a bill drawn, accepted, or endorsed without consideration is called an accommodation bill. 

An accommodating party is someone who lends his name to oblige the other party, while the accommodated party is the one who is obliged. 

An accommodation party is not liable for the instrument to the party accommodated because there was no consideration between them, and the instrument was merely to help.

 

Documentary Bill

A documentary bill is a bill of exchange drawn on a consignee of goods with the shipment documentation attached as collateral security for its payment.

The documentary bill of exchange format is accompanied by the required documents, confirming the sale’s legitimacy or transaction between the seller and buyer. This bill has two parts: Documents against payment and Documents against acceptance.

 

Foreign Bill 

A foreign bill is used when payments specified in a bill of exchange format are made outside India’s borders.

All bills which are not inland are deemed to be foreign bills. Foreign bills are usually drawn in sets of three.

 

Bank Draft

A bill of exchange format is also sometimes spoken of as a draft. It is called a bank draft when a bill of exchange is drawn by one bank on another bank or by itself on its branch and is a negotiable instrument. 

It is like a cheque with three points of distinction between the two. 

(1) A bank draft can be drawn only by a bank on another bank, usually its branch. 

(2) It cannot be rescinded so quickly.

(3) It cannot be made payable to the bearer.

Difference Between Bills of Exchange and Promissory Notes

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A bill of exchange format contains an order to pay, whereas a promissory note is a promise to pay.

Three parties are involved in a bill of exchange: drawer, drawee, and payee. Only two parties are engaged in a promissory note: the maker and payee. 

The liability of the drawer of a bill of exchange is secondary and conditional as opposed to the liability of the maker of a promissory note which is primary and absolute. The drawer is only liable to pay if the drawee fails to pay the money after accepting the bill of exchange. 

In a bill of exchange, the drawer may order the payment to himself, i.e., he can be the payee. The maker and payer can’t be the same person in the case of a promissory note.

A bill of exchange format provides the drawee with an unconditional order to pay as directed by the drawer. A promissory note is an unconditional promise by the maker to pay the payee or his order.

A debtor or drawee can only make payment after a bill of exchange is accepted by the drawee or someone on his behalf. Before it is presented for payment, there is no prior acceptance by the maker of a promissory note. 

A notice is a requirement to be given in case of dishonor of the bill of exchange format. No notice is a requirement to be delivered in case of dishonor of promissory note.

Features of a Bill of Exchange

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  • A bill of exchange must be in writing.
  • It must contain an order for the drawee to pay.
  • The order to pay must be unconditional.
  • The amount ordered must be definite and certain.
  • The drawer must sign the bill of exchange.
  • The parties to a bill of exchange must be certain.
  • The sum payable must also be certain.
  • It must comply with other formalities, e.g. stamps, dates, etc.

Importance of Bill of Exchange

Vyapar's free bill of exchange maker

A bill of exchange format can assist exporters in mitigating some of the risks they face because each nation has its own set of laws, regulations, and customs.

Every day, exchange rates fluctuate. A bill of exchange that specifies fixed payment terms between businesses in different nations can provide assurances for all parties.

Bills of exchange can also protect exporters against late payments if they have agreed in advance with their bank.

A bill of exchange format helps make the transaction between buyers and sellers, creditors, debtors, the person who writes and signs the bill, and the final payee legal. 

The bill of exchange format is valid evidence of the commerce transaction in case of a discrepancy. It is a legal document, so if the drawee fails to pay the amount, the drawer can recover it legally.

The drawer can convert the bill into cash by discounting it from a bank by paying some nominal charges if they need cash.

A party to a transaction can exchange a bill of exchange between individuals for debt adjustment.

Benefits of Using Vyapar For Creating Bill of Exchange Format

Customizable Bill of Exchange Format:

Vyapar bill of exchange formats is entirely customizable. You can include our company logo, style, font, and brand colours in your invoice to fully represent your company’s identity. 

You can also insert or remove any row or column. With our bill of exchange format maker app’s numerous invoice templates, you can create customized invoices that will make you appear professional to your clients. 

Having everything on the bill in order informs your customer of how much and why you are charging. You can also schedule payment reminders and email them to your customers to avoid late payments.

Save Time and Energy:

Our bill of exchange template maker app is a free resource for trade management that allows users to keep track of their exports and organize all relevant information in one place.

Manual making of bills is time-consuming and prone to errors. You can avoid this problem by using automation in the Vyapar app. The Vyapar allows you to create unique invoice and the necessary reports.

Vyapar invoices are entirely customizable. Vyapar allows you to track all the necessary data in one place, making it easier for new users. You can save your bill of exchange format and use the same in the future.

Track Order:

The Vyapar bill of exchange format makes setting a due date easier to track orders. Configuring an automatic stock adjustment is possible. It ensures the availability of inventory items.

The ability to track orders enables prompt order fulfillment. You can also track when payments are due and attach tax invoices to orders with the app. Several choices are available through Vyapar, including Microsoft Excel, Google Docs, and Microsoft Word.

You can track open, closed, and late orders with Vyapar’s free bill of exchange format maker. Because of this, it is the best option for businesses. Vyapar can streamline the entire tracking process with these features.

Make Bills of Exchange Without the Internet:

You can use Vyapar’s features without access to the internet. You can keep running your business and accept payments without any problem with the offline availability of the app.

Cash and eWallets are the best payment options for India’s remote and hilly regions because you can use them to collect payments even if you don’t have an internet connection. The Vyapar app lets you bill your customers even when you aren’t online.

When you connect your database to the internet, our business accounting software will check and update your transactions. You can quickly create customer invoices using our free transport invoice formats.

Benefits of Free Services:

The bill of exchange format generator’s basic plan is free for Android users. To provide its clients with the best possible service, Vyapar makes complementary features available for free.

You have control over your dashboard and the items in your inventory. With free access, you can use many more valuable features. You can manage your accounting requirements on your PC from a single window.

Additionally, the app, accessible on Android smartphones, allows you to obtain data and records. The accounting software can be downloaded and signed up for free from the Google Play Store.

Simple Bank Account Management:

The bill of exchange format generator allows businesses to add, monitor, and track payments. Companies can quickly enter data using the free billing software they receive as payment.

A user can access the invoice generator from any location with an internet connection using a smartphone. Your cash flow will be easier to manage. Vyapar manually adjusts the amount of each cheque payment.

To use the app’s bank accounts feature, you must first link a business account with your bank to Vyapar. You can easily manage your credit card, OD, and loan accounts with our free travel invoice creator.

Features that Make Vyapar the Best-Suited App For Small Businesses

Various Payment Options:

Customers want convenience, and the ability to choose how they pay you is a significant benefit you can provide. You may create high-quality bills of exchange with several payment options using the Vyapar invoicing tool.

Allow current and new clients to pay on demand using their preferred payment option. A single QR code that accepts all payment methods can be generated.

Vyapar has cash, credit card, debit card, UPI, NEFT, RTGS, QR codes, e-wallets, pay later, and other payment methods. You may send bills to customers via email and Whatsapp using Vyapar.

All of the themes can be entirely customized by the user. It can be used by any commercial firm, including merchants, pharmaceutical companies, gyms, restaurants, and other industries.

 

Data Protection and Security:

Vyapar protects the privacy of its users. Your data is encrypted and kept safe on your device. The app will only use your data for login security, encryption, backups, and updates. 

Vyapar never shares Google’s authentication information with anyone; no one else can access it. In the event of a server failure, the backup and updates will allow you to pick up where you left off.

Vyapar lets you set up an automatic data backup, which ensures the security of the data stored in the app. You can increase security even further by creating a local backup.

It would aid in the security of data stored in a private location, such as a pen drive or hard drive. You can protect your company’s security by using the Vyapar app to schedule automatic backups or perform secure backups regularly.

 

Keep Optimum Inventory Levels:

You may set low inventory notifications in the Vyapar app. It provides you with a list of low-quantity products. It automatically updates item availability, freeing up your time for other tasks.

Vyapar simplifies increasing your sale/purchase order formats kinds and brand image. It also increases client satisfaction and retention.

Inventory tracking enables you to meet requests on time. Before you run out of supplies, you can place orders based on Vyapar reports. It helps you make the most of your inventory space.

You can avoid losses by tracking your inventory. You will be alerted if there is a robbery. You may also see pending and completed orders.

 

Bill of Exchange Payables and Receivables:

Users can keep track of their cash flow via bill of exchange in real time and preserve all transaction data with our bill of exchange template. Using the software, you can keep track of the party’s payables and receivables.

The way you protect your transaction data has been improved. Using the software’s business dashboard, you can keep track of the money you need to receive and pay. It is easy to determine who still owes you money.

You can set up payment reminders for these clients via WhatsApp, SMS, or email to ensure they pay their invoices on time. Additionally, using the bulk payment reminder option, you can simultaneously send payment reminders to your customers and save time.

Calculations are performed automatically by the bill maker program. You can avoid bad debts and reevaluate your business plan due to the Vyapar cash flow management system’s early detection of potential issues.

 

Quickly Generate Estimates:

You can quickly generate estimates for customers using the Vyapar app. The majority of the process is automated, resulting in error-free quotes.

Vyapar’s tally bill formats add professionalism to your estimates while simplifying management. Customers can quickly understand them, which helps with client retention.

The built-in mechanism of the app allows you to send quotations at any time. There is no need to generate an invoice right away. Once the transaction is completed, you can convert those estimates to sale invoices.

Vyapar offers the option of obtaining quick quotes. You can generate them from anywhere and improve the efficiency of your business. You can also keep track of bills by assigning a due date.

 

Make Delivery Challans and Keep Track of Them:

Using the Vyapar bill of exchange maker app, you can create delivery challans and include them with your shipment. It demonstrates that the delivery was made and acknowledged by the recipient.

You can keep track of your bills of exchange with Vyapar. You can locate your package and provide instructions if it gets lost. It ensures that mail reaches its intended recipient safely.

The transport delivery challan format and shipment information contain the order’s terms and conditions. It helps keep disagreements at bay and makes the process run more smoothly.

After the shipment has been delivered to the customer, delivery challans can be converted into invoices. Your customers will appreciate it if you provide in-person and online payment options.

Frequently Asked Questions (FAQs):

What is the Format of the Bill of Exchange?

The format of a bill of exchange must contain the following details:

  • Name of a person who writes the invoice and authorizes the recipient to pay.
  • Date of payment
  • Details of the recipient
  • Details of the payee
  • A unique identification number
  • Drawer’s signature, i.e. the person who makes the bill must sign it.

 

What is the Bill of Exchange? Explain With an Example.

As per the negotiable instruments act, a bill of exchange is an instrument in writing containing an unconditional order signed by the maker directing a particular person to pay a certain sum of money only to or to the order of a particular person or the bearer of the instrument. 

 

For instance, if X orders Y to pay ₹ 50,000 for 90 days after the date and Y acknowledges this request by marking his name, it will be a bill of trade.

 

What are the Three Types of Bills of Exchange?

Documentary bills, Demand bills, and Inland bills are the three types of bills of exchange.

 

Are Bills of Exchange Debit or Credit?

Bills of exchange are credit instruments.

 

Is a Cheque a Bill of Exchange?

A cheque is a type of bill of exchange format. It is paid immediately or on demand in fixed or determinable future time and drawn on a banker.

 

How Many Parties are in a Bill of Exchange?

There are three parties in a bill of exchange.

  1. The drawee
  2. The drawer
  3. The payee

 

Who is the Payee in the Bill of Exchange?

The payee is also known as the beneficiary. A bill of exchange is payable to the payee.

 

When is the Bill of Exchange Used?

A bill of exchange is used during international trade transactions as a payment instrument.

 

Is a Bill of Exchange an Asset?

Yes, a bill of exchange comes under the liquid asset category, also known as near money. You can get a bill of exchange discounted by the bank before its maturity.

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