10.4 Bill of Exchange,Promissory Note and Cheque C...
All of the three are negotiable instruments that can be used for settling international transactions,although promissory notes and cheques are used only in limited regions or countries.Both a bill of exchange and a cheque are orders of payment while a promissory note is a promise of payment.A cheque is a special form of bill of exchange in that its drawee/payer is a bank.
As the exporter,you can draw a bill of exchange,requesting the importer or his/her bank(depending on the payment arrangement)to pay you or your order(such as your bank or supplier).In the case of a time bill that has been accepted,you(or other payee specified on the bill)have the option to trade the bill to another party,such as a bank,to get the money sooner.
On rare occasions,the importer may take the initiative to pay by issuing a promissory note to you.When you get the note,you may also transfer it to another party to get payment sooner.
Alternatively,the importer may write a cheque,instructing his/herbank to pay you or your order,and you can then cash the cheque,deposit it into your bank account or transfer it to another party.See a comparison of bills of exchange,promissory notes and cheques in Table 10-2.
Table 10-2 Bill of Exchange,Promissory Note and Cheque Compared