A bill of exchange is a written payment order issued by the drawer, instructing the payer to unconditionally pay a certain sum to the payee or holder at sight or on a specified date. Its core function is to serve as a credit instrument and settlement tool in international trade, facilitating payment for goods through bank or commercial credit, and it can be transferred and circulated by endorsement. A bill of exchange is a key document under collection and letters of credit, with legal binding force, clarifying the rights and obligations of all parties and ensuring transaction security.
A bill of exchange is a written payment order issued by the drawer, instructing the payer to unconditionally pay a certain sum to the payee or holder at sight or on a specified date. Its core function is to serve as a credit instrument and settlement tool in international trade, facilitating payment for goods through bank or commercial credit, and it can be transferred and circulated by endorsement. A bill of exchange is a key document under collection and letters of credit, with legal binding force, clarifying the rights and obligations of all parties and ensuring transaction security.
🎯 Purpose
A bill of exchange is used to address the credit and payment risks arising from the separation of time and space between buyers and sellers. Exporters need it as a receipt for payment, importers pay or accept it, and banks handle settlement based on it. It is widely used in letters of credit, collections, remittances, and other processes, especially in large-scale trade, where it provides financing convenience (such as discounting). It is also an important document for customs and banks to verify the authenticity of transactions.
A bill of exchange is used to address the credit and payment risks arising from the separation of time and space between buyers and sellers. Exporters need it as a receipt for payment, importers pay or accept it, and banks handle settlement based on it. It is widely used in letters of credit, collections, remittances, and other processes, especially in large-scale trade, where it provides financing convenience (such as discounting). It is also an important document for customs and banks to verify the authenticity of transactions.
📋 Key Fields
Date of Issue: The date on which the bill of exchange is issued, usually not earlier than the invoice date, nor later than the letter of credit expiry date or the presentation period.. 常见错误: The date is earlier than the invoice or later than the letter of credit deadline, resulting in discrepancies in documents. Place of Issue: The city where the drawer is located, affecting the applicable law and jurisdiction, usually consistent with the drawer's address.. 常见错误: Omission or incorrect filling, resulting in inability to determine the applicable law in case of legal disputes. Bill Number: A number for internal management and inquiry, generally consistent with the invoice number.. 常见错误: Duplicate numbers or inconsistency with the invoice number, causing difficulties in reconciliation. Bill Amount (in figures): The payment amount expressed in numbers, which must be consistent with the invoice and letter of credit amounts, and the currency must be indicated.. 常见错误: The amount does not match the invoice, or the currency is not indicated, leading to bank refusal. Bill Amount (in words): The amount expressed in words, which must be exactly consistent with the figures to prevent tampering.. 常见错误: Inconsistency between words and figures, or spelling errors, may cause the bank to return the documents. Tenor: Such as at sight or usance (e.g., 30 days, 60 days), must be consistent with the contract or letter of credit provisions.. 常见错误: Incorrect or ambiguous tenor, leading to payment delay or refusal. Payee: The name of the payee, usually the exporter or its designated bank, must be accurate.. 常见错误: Misspelled name or inconsistency with the letter of credit, affecting receipt of payment. Drawer: The party issuing the bill of exchange, generally the exporter, requiring signature and seal.. 常见错误: No signature or seal, making the bill invalid. Drawee: The party responsible for payment, usually the importer or its bank, must be consistent with the letter of credit.. 常见错误: Incorrect drawee name or incomplete address, leading to presentation failure. Drawn Clause: Indicate the letter of credit number, issuing bank, date of issue, etc., on which the bill is based, showing payment responsibility.. 常见错误: Omission or incorrect reference to letter of credit information, causing discrepancies. Interest Clause: If interest is to be calculated on a usance bill, the interest rate and value date should be indicated, but letters of credit usually prohibit this.. 常见错误: Adding interest clause without permission, leading to bank refusal. Drawee's Account Number: The drawee's bank account number, facilitating electronic clearing, not mandatory but helpful for quick processing.. 常见错误: Incorrect account number causing payment delay or return. Endorsement: The payee signs on the back when transferring the rights of the bill, divided into blank endorsement and special endorsement.. 常见错误: Discontinuous endorsement or inconsistent signature, affecting circulation. Unconditional Order to Pay: Clearly state 'pay' rather than 'please pay', reflecting the unconditional nature of the bill.. 常见错误: Use of request words, leading to disputes over the nature of the bill. Governing Law: Indicate which law governs the bill, such as the Negotiable Instruments Law or international conventions, to reduce disputes.. 常见错误: Not indicated, leading to unclear applicable law.
Date of Issue
The date on which the bill of exchange is issued, usually not earlier than the invoice date, nor later than the letter of credit expiry date or the presentation period.
⚠️ The date is earlier than the invoice or later than the letter of credit deadline, resulting in discrepancies in documents.
Place of Issue
The city where the drawer is located, affecting the applicable law and jurisdiction, usually consistent with the drawer's address.
⚠️ Omission or incorrect filling, resulting in inability to determine the applicable law in case of legal disputes.
Bill Number
A number for internal management and inquiry, generally consistent with the invoice number.
⚠️ Duplicate numbers or inconsistency with the invoice number, causing difficulties in reconciliation.
Bill Amount (in figures)
The payment amount expressed in numbers, which must be consistent with the invoice and letter of credit amounts, and the currency must be indicated.
⚠️ The amount does not match the invoice, or the currency is not indicated, leading to bank refusal.
Bill Amount (in words)
The amount expressed in words, which must be exactly consistent with the figures to prevent tampering.
⚠️ Inconsistency between words and figures, or spelling errors, may cause the bank to return the documents.
Tenor
Such as at sight or usance (e.g., 30 days, 60 days), must be consistent with the contract or letter of credit provisions.
⚠️ Incorrect or ambiguous tenor, leading to payment delay or refusal.
Payee
The name of the payee, usually the exporter or its designated bank, must be accurate.
⚠️ Misspelled name or inconsistency with the letter of credit, affecting receipt of payment.
Drawer
The party issuing the bill of exchange, generally the exporter, requiring signature and seal.
⚠️ No signature or seal, making the bill invalid.
Drawee
The party responsible for payment, usually the importer or its bank, must be consistent with the letter of credit.
⚠️ Incorrect drawee name or incomplete address, leading to presentation failure.
Drawn Clause
Indicate the letter of credit number, issuing bank, date of issue, etc., on which the bill is based, showing payment responsibility.
⚠️ Omission or incorrect reference to letter of credit information, causing discrepancies.
Interest Clause
If interest is to be calculated on a usance bill, the interest rate and value date should be indicated, but letters of credit usually prohibit this.
⚠️ Adding interest clause without permission, leading to bank refusal.
Drawee's Account Number
The drawee's bank account number, facilitating electronic clearing, not mandatory but helpful for quick processing.
⚠️ Incorrect account number causing payment delay or return.
Endorsement
The payee signs on the back when transferring the rights of the bill, divided into blank endorsement and special endorsement.
⚠️ Discontinuous endorsement or inconsistent signature, affecting circulation.
Unconditional Order to Pay
Clearly state 'pay' rather than 'please pay', reflecting the unconditional nature of the bill.
⚠️ Use of request words, leading to disputes over the nature of the bill.
Governing Law
Indicate which law governs the bill, such as the Negotiable Instruments Law or international conventions, to reduce disputes.
⚠️ Not indicated, leading to unclear applicable law.
⚠️ Common Mistakes
The bill amount is inconsistent with the invoice and letter of credit amounts, including currency, figures, or words errors, leading to bank refusal or delayed payment. Incorrect tenor, such as writing at sight as usance, or not filling in according to the letter of credit, causing unclear payment responsibility. The drawer has not signed or sealed, or the signature does not match the specimen, making the bill invalid. Misspelled payee name or inconsistency with the letter of credit, affecting the payee's rights. Omission or incorrect reference to the letter of credit number or issuing bank in the drawn clause, causing discrepancies. The bill date is earlier than the invoice date or later than the presentation period, violating letter of credit requirements. Failure to indicate the place of issue and place of payment, affecting legal jurisdiction and presentation for payment. Discontinuous endorsement or endorser's signature not meeting requirements, affecting circulation and discounting of the bill.
⚠️ The bill amount is inconsistent with the invoice and letter of credit amounts, including currency, figures, or words errors, leading to bank refusal or delayed payment.
⚠️ Incorrect tenor, such as writing at sight as usance, or not filling in according to the letter of credit, causing unclear payment responsibility.
⚠️ The drawer has not signed or sealed, or the signature does not match the specimen, making the bill invalid.
⚠️ Misspelled payee name or inconsistency with the letter of credit, affecting the payee's rights.
⚠️ Omission or incorrect reference to the letter of credit number or issuing bank in the drawn clause, causing discrepancies.
⚠️ The bill date is earlier than the invoice date or later than the presentation period, violating letter of credit requirements.
⚠️ Failure to indicate the place of issue and place of payment, affecting legal jurisdiction and presentation for payment.
⚠️ Discontinuous endorsement or endorser's signature not meeting requirements, affecting circulation and discounting of the bill.
🌍 Country Requirements
United States: The United States has no special format requirements for bills of exchange, but they must comply with the Uniform Commercial Code regarding negotiable instruments. Banks usually require the bill to state 'Pay to the order of' and the drawer's signature. If used under a letter of credit, it must strictly comply with UCP600. Note: State laws vary slightly; refer to the latest local regulations. European Union: EU member states mostly follow the Geneva Uniform Law on Bills of Exchange and Promissory Notes, requiring the bill to state the words 'Bill of Exchange', an unconditional order to pay, the drawee's name, date of payment, date and place of issue, and the drawer's signature. The amount must be consistent in words and figures. EU customs may require the bill to be consistent with the invoice and packing list to verify the authenticity of the transaction. Japan: Japan's Bills of Exchange Law requires the bill to contain words indicating it is a bill of exchange, an unconditional order to pay a certain sum, the drawee's name, date of issue, and the drawer's signature. The tenor can be at sight or usance. Banks focus on strict document consistency; standard formats are recommended. Refer to the latest Japan Customs announcements. South Korea: South Korea adopts the Bills of Exchange Act and Check Act; the bill must have legal elements, including the drawer's signature, drawee's name, amount, date of issue, etc. Korean banks strictly review bills under letters of credit, requiring full consistency with the letter of credit terms. For import customs clearance, the bill may serve as a payment voucher and must be consistent with the contract. Middle East (Saudi Arabia/UAE): Saudi Arabia and the UAE mostly adopt Islamic legal systems; bills must comply with local commercial practices. Saudi Arabia often requires chamber of commerce or consular legalization and details of the transaction. The UAE is more flexible on format, but banks may require Arabic translation. Note: Saudi customs may require the bill to be submitted together with the invoice and certificate of origin; refer to the latest local regulations. Brazil: Brazil often uses bills of exchange for import settlement, but attention must be paid to the Central Bank of Brazil's foreign exchange regulations. The bill must be consistent with the commercial invoice, bill of lading, etc., and the drawee information must be accurate. Brazilian customs may require the bill to be notarized or legalized. Due to foreign exchange controls, it is recommended to present documents through a bank and monitor the latest foreign exchange regulations. India: India's Negotiable Instruments Act stipulates that a bill of exchange must be in writing, contain an unconditional order to pay, be signed by the drawer, and clearly identify the drawee. Indian banks strictly review bills under letters of credit, often requiring the letter of credit number to be indicated. For import customs clearance, the bill may need to be consistent with the invoice and packing list. Note India's foreign exchange management regulations; refer to the latest local announcements. Russia: Russia's Bills of Exchange Law is based on the Geneva Convention, requiring the bill to contain statutory items, including an unconditional order to pay, the drawee's name, date of payment, date and place of issue, and the drawer's signature. Russian banks have strict format requirements and may require Russian translation. For customs clearance, it must be consistent with the contract and invoice; refer to the latest regulations of the Central Bank of Russia.
United States
The United States has no special format requirements for bills of exchange, but they must comply with the Uniform Commercial Code regarding negotiable instruments. Banks usually require the bill to state 'Pay to the order of' and the drawer's signature. If used under a letter of credit, it must strictly comply with UCP600. Note: State laws vary slightly; refer to the latest local regulations.
European Union
EU member states mostly follow the Geneva Uniform Law on Bills of Exchange and Promissory Notes, requiring the bill to state the words 'Bill of Exchange', an unconditional order to pay, the drawee's name, date of payment, date and place of issue, and the drawer's signature. The amount must be consistent in words and figures. EU customs may require the bill to be consistent with the invoice and packing list to verify the authenticity of the transaction.
Japan
Japan's Bills of Exchange Law requires the bill to contain words indicating it is a bill of exchange, an unconditional order to pay a certain sum, the drawee's name, date of issue, and the drawer's signature. The tenor can be at sight or usance. Banks focus on strict document consistency; standard formats are recommended. Refer to the latest Japan Customs announcements.
South Korea
South Korea adopts the Bills of Exchange Act and Check Act; the bill must have legal elements, including the drawer's signature, drawee's name, amount, date of issue, etc. Korean banks strictly review bills under letters of credit, requiring full consistency with the letter of credit terms. For import customs clearance, the bill may serve as a payment voucher and must be consistent with the contract.
Middle East (Saudi Arabia/UAE)
Saudi Arabia and the UAE mostly adopt Islamic legal systems; bills must comply with local commercial practices. Saudi Arabia often requires chamber of commerce or consular legalization and details of the transaction. The UAE is more flexible on format, but banks may require Arabic translation. Note: Saudi customs may require the bill to be submitted together with the invoice and certificate of origin; refer to the latest local regulations.
Brazil
Brazil often uses bills of exchange for import settlement, but attention must be paid to the Central Bank of Brazil's foreign exchange regulations. The bill must be consistent with the commercial invoice, bill of lading, etc., and the drawee information must be accurate. Brazilian customs may require the bill to be notarized or legalized. Due to foreign exchange controls, it is recommended to present documents through a bank and monitor the latest foreign exchange regulations.
India
India's Negotiable Instruments Act stipulates that a bill of exchange must be in writing, contain an unconditional order to pay, be signed by the drawer, and clearly identify the drawee. Indian banks strictly review bills under letters of credit, often requiring the letter of credit number to be indicated. For import customs clearance, the bill may need to be consistent with the invoice and packing list. Note India's foreign exchange management regulations; refer to the latest local announcements.
Russia
Russia's Bills of Exchange Law is based on the Geneva Convention, requiring the bill to contain statutory items, including an unconditional order to pay, the drawee's name, date of payment, date and place of issue, and the drawer's signature. Russian banks have strict format requirements and may require Russian translation. For customs clearance, it must be consistent with the contract and invoice; refer to the latest regulations of the Central Bank of Russia.
❓ FAQ
What is the difference between a bill of exchange, a promissory note, and a check?: A bill of exchange involves three parties: the drawer instructs the drawee to pay. A promissory note involves only two parties: the maker promises to pay. A check involves the depositor instructing the bank to pay, and the drawee is limited to a bank. Bills of exchange are used in international trade settlement, while promissory notes and checks are mostly used domestically. Must a bill of exchange be submitted under a letter of credit?: Not necessarily. According to UCP600, if the letter of credit requires submission of a bill of exchange, it must be submitted; if not required, it may be omitted. However, some banks still require a bill as a payment voucher. It is recommended to operate according to the letter of credit. How should the tenor of a bill of exchange be filled in?: For a sight bill, fill in 'at sight' or 'on demand'; for a usance bill, fill in the specific number of days, such as 'at 30 days after sight' or 'at 60 days after B/L date'. It must be consistent with the contract and letter of credit, otherwise it may be refused. What if the amount in words and figures on the bill of exchange are inconsistent?: Banks usually take the amount in words as authoritative, but may treat it as a discrepancy and refuse payment. Ensure that words and figures are exactly consistent; if there is an error, a new bill must be issued. Under a letter of credit, any inconsistency may lead to discrepancies. Does a bill of exchange need to be endorsed?: If the bill specifies a payee, the payee must endorse when transferring rights. A blank endorsement is just a signature; a special endorsement requires the name of the endorsee. Endorsement must be continuous, otherwise it affects circulation and discounting. In collections and letters of credit, banks usually endorse. Who is the drawer of a bill of exchange?: The drawer is usually the exporter or seller, but can also be a bank. Under a letter of credit, the drawer is generally the beneficiary. The drawer must sign and is liable for the acceptance and payment of the bill. How to handle a lost bill of exchange?: If a bill is lost, the person who lost it may apply to the court for public notice or file a lawsuit, and after obtaining a judgment of nullification, request payment from the drawee. Alternatively, request the drawer to reissue the bill, but a guarantee may be required. It is recommended to keep it safe to avoid loss. Does a bill of exchange need to specify the governing law?: Not mandatory, but specifying it can reduce disputes. Usually, the law of the place of issue or payment applies. In international trade, it may specify the Geneva Uniform Law on Bills of Exchange and Promissory Notes or the law of a certain country. If not specified, it may be determined by the court according to conflict of laws.
Q: What is the difference between a bill of exchange, a promissory note, and a check?
A: A bill of exchange involves three parties: the drawer instructs the drawee to pay. A promissory note involves only two parties: the maker promises to pay. A check involves the depositor instructing the bank to pay, and the drawee is limited to a bank. Bills of exchange are used in international trade settlement, while promissory notes and checks are mostly used domestically.
Q: Must a bill of exchange be submitted under a letter of credit?
A: Not necessarily. According to UCP600, if the letter of credit requires submission of a bill of exchange, it must be submitted; if not required, it may be omitted. However, some banks still require a bill as a payment voucher. It is recommended to operate according to the letter of credit.
Q: How should the tenor of a bill of exchange be filled in?
A: For a sight bill, fill in 'at sight' or 'on demand'; for a usance bill, fill in the specific number of days, such as 'at 30 days after sight' or 'at 60 days after B/L date'. It must be consistent with the contract and letter of credit, otherwise it may be refused.
Q: What if the amount in words and figures on the bill of exchange are inconsistent?
A: Banks usually take the amount in words as authoritative, but may treat it as a discrepancy and refuse payment. Ensure that words and figures are exactly consistent; if there is an error, a new bill must be issued. Under a letter of credit, any inconsistency may lead to discrepancies.
Q: Does a bill of exchange need to be endorsed?
A: If the bill specifies a payee, the payee must endorse when transferring rights. A blank endorsement is just a signature; a special endorsement requires the name of the endorsee. Endorsement must be continuous, otherwise it affects circulation and discounting. In collections and letters of credit, banks usually endorse.
Q: Who is the drawer of a bill of exchange?
A: The drawer is usually the exporter or seller, but can also be a bank. Under a letter of credit, the drawer is generally the beneficiary. The drawer must sign and is liable for the acceptance and payment of the bill.
Q: How to handle a lost bill of exchange?
A: If a bill is lost, the person who lost it may apply to the court for public notice or file a lawsuit, and after obtaining a judgment of nullification, request payment from the drawee. Alternatively, request the drawer to reissue the bill, but a guarantee may be required. It is recommended to keep it safe to avoid loss.
Q: Does a bill of exchange need to specify the governing law?
A: Not mandatory, but specifying it can reduce disputes. Usually, the law of the place of issue or payment applies. In international trade, it may specify the Geneva Uniform Law on Bills of Exchange and Promissory Notes or the law of a certain country. If not specified, it may be determined by the court according to conflict of laws.
📝 Sample
[Bill of Exchange - Complete Filling Sample]
Date of Issue: 2026-09-15
Place of Issue: Shanghai, China
Bill of Exchange No.: INV-2026-0915-A
Amount (in figures): USD 128,450.00
Amount (in words): SAY US DOLLARS ONE HUNDRED TWENTY-EIGHT THOUSAND FOUR HUNDRED AND FIFTY ONLY
Tenor: At 60 days after sight
Payee: Shanghai Sunrise Trading Co., Ltd.
Drawer: Shanghai Sunrise Trading Co., Ltd.
Drawee: Pacific Rim Importers Inc.
Drawing Clause: Drawn under Irrevocable Documentary Credit No. LC-2026-07845 issued by Bank of East Asia, Hong Kong Branch, dated 2026-08-20.
Interest Clause: Interest at 5.25% per annum from date of negotiation until payment, if applicable.
Drawee's Account No.: HK-002-889-102345-6
Endorsement: Pay to the order of Bank of China, Shanghai Branch. For and on behalf of Shanghai Sunrise Trading Co., Ltd. (signed)
Unconditional Order to Pay: Pay to the order of the beneficiary the sum specified herein unconditionally.
Governing Law: This Bill of Exchange is governed by the Bills of Exchange Act and applicable international conventions.
The above is a sample only. Actual completion shall be subject to the L/C, contract, and importing country's requirements.
[Bill of Exchange - Complete Filling Sample]
Date of Issue: 2026-09-15
Place of Issue: Shanghai, China
Bill of Exchange No.: INV-2026-0915-A
Amount (in figures): USD 128,450.00
Amount (in words): SAY US DOLLARS ONE HUNDRED TWENTY-EIGHT THOUSAND FOUR HUNDRED AND FIFTY ONLY
Tenor: At 60 days after sight
Payee: Shanghai Sunrise Trading Co., Ltd.
Drawer: Shanghai Sunrise Trading Co., Ltd.
Drawee: Pacific Rim Importers Inc.
Drawing Clause: Drawn under Irrevocable Documentary Credit No. LC-2026-07845 issued by Bank of East Asia, Hong Kong Branch, dated 2026-08-20.
Interest Clause: Interest at 5.25% per annum from date of negotiation until payment, if applicable.
Drawee's Account No.: HK-002-889-102345-6
Endorsement: Pay to the order of Bank of China, Shanghai Branch. For and on behalf of Shanghai Sunrise Trading Co., Ltd. (signed)
Unconditional Order to Pay: Pay to the order of the beneficiary the sum specified herein unconditionally.
Governing Law: This Bill of Exchange is governed by the Bills of Exchange Act and applicable international conventions.
The above is a sample only. Actual completion shall be subject to the L/C, contract, and importing country's requirements.
📥 Download Word Template
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⚠️ This page is for reference only. Customs regulations may change; please refer to the latest announcement of local customs brokers or customs authorities.