What is bill of exchange in business

Bill of exchange is the unconditional order by one party(drawer) instructing the second party(drawee) to pay certain amount,either immediately(sight bill) or at future agreeable date(term bill) for the
goods and service offered.Usually the drawer is the person who had purchases the goods and services from the payee(who is the supplier of goods and services).

So in bill of exchange,the drawer usually instructs it's bank(drawee) to pay payee(who is the supplier of goods and services to the drawer) a certain amount either immediately or at future agreeable date.

Some time instead of the payee receiving the payment's,the payee can endorse the bill of exchange for third party to receive the payment's.Third party is usually another person who was not involved in the original transaction.

When bill of exchange is issued by bank then it is known as draft bill and when the bill of exchange is issued by individual,then it is known as trade bill.

Bill of exchange can be used for local and international transaction's.

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