Livestock Economics, Marketing and Business Management

ADVANTAGE OF A BILL OF EXCHANGE

•  The advantage of the use of a bill of exchange may be enumerated as follows:
  • An accepted bill of exchange is a written and signed acknowledgement of debt and it affords conclusive proof of indebtedness.
  • Payment can be enforced on a bill of exchange in a court of law.
  • The date of maturity of bill ensures the creditor when of expect his money and the debtor or acceptor also knows when he will be called upon to pay.
  • The debtor enjoys the full period of credit. He can never be called upon to pay the amount of the bill before the due date.
  • The creditor need not lock up his funds because he can, if he so desires, convert it into cash by discounting the bill. Discounting means converting the bill into cash with a bank or financier after deducting a small sum known as discount from the total amount of the bill.
  • It is negotiable instrument and can be transferred from hand to hand in settlement of debts.
  • It is easy and convenient method of transmitting money from one place to another.
  • Accommodation bills enable the businessmen to obtain funds from the market at cheap rates to meet their temporary financial requirements.