Bills of Exchange

Advantages of Bills of Exchange:

Companies have used Bills of Exchange for hundreds of years. Their longevity is due to the advantages they provide in a trading transaction.

• A Bill of Exchange facilitates the granting of trade credit to a buyer.
• A Bill of Exchange provides a legal acknowledgement that a debt exists.
• It can provide the seller with access to financing.
• It can provide easy access to the legal systems in the event of non-payment.

Legal Protection afforded by Bills of Exchange:

An advantage for a seller in using a Bill of Exchange is the capability of the Bill of Exchange to provide formal documentary evidence that the demand for payment or acceptance has been made to the buyer. In addition, it may be possible to sue the buyer for non-payment based solely on this documentary evidence. A seller can protect their interests by requesting that a Bill of Exchange be noted or protested for non-payment or non-acceptance. When a Bill is not paid or accepted it is said to have been "dishonoured".

Noting:

A Bill is noted in order to obtain official evidence that it has been dishonoured. A Notary Public re-presents the Bill to the drawee for acceptance or payment and minutes on the Bill the reason given for dishonour. Noting is often followed by a formal protest.

Protesting:

Protesting is a more formal process than noting and results in the production by the Notary Public of a formal deed of protest bearing a notary's seal. This document again provides formal evidence of the presentation of the Bill to the drawee and the reason for dishonour. The protest is accepted by most courts in the world as evidence that a Bill has been dishonoured.

©Copyright Allied Irish Banks p.l.c. 2000
AIB Trade Finance Services is a part of Allied Irish Banks p.l.c.
Registered in Ireland: Registered Number is 024173
Allied Irish Banks p.l.c. is regulated by the Financial Regulator
Registered Office:
Bankcentre
Ballsbridge
Dublin 4
Ireland