Bills of Exchange & All That . . .

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trajan

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I've come across Bills of Exchange in bookkeeping texts but never in real life.
Are these ever used nowadays ? (I ask as they are legally defined in an Act of 1882.)

The BoE process is straightforward enough except for the process of early redemption to a discounting bank. It seems to me that if a BoE is issued unilaterally by a company, to even an existing business, there is no guarantee that the discounting bank will accept it as the drawee may have a poor credit record. Therefore, may I ask, is it normal to consult with the discounter ahead of issuing the BoE to a new customer ?
I'm taking it that no BoEs are issued to start-ups, is that so ?
(That said, I know of many small businesses that began life on post-dated cheques from suppliers.)
 
Sorry, how would a post-dated cheque from a SUPPLIER help cash flow?
 
Buys with a PDC dated 6 weeks ahead of cheque issue date.
Sells all goods in 4 weeks and then able to pay supplier by PDC encashment date.
 
trajan said:
Buys with a PDC dated 6 weeks ahead of cheque issue date
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Cheque to supplier, not from.

You won't see BOE in everyday circumstances. An invoice does pretty much the same thing, except that a BOE is signed by debtor, and becomes a transferable instrument. But, with invoice discounting available, and invoice achieves the same result.
Theoretically they can be used in export trade, but in reality bank guarantees are generally used. I've never seen one.
 
The from bit comes from the fact that it's the suppliers that offer to accept the PDC as payment.

What about the other questions ?
 
trajan said:
The from bit
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Is wrong in the context you used it. The credit is from the supplier. The cheque is to the supplier.

trajan said:
What about the other questions ?
Click to expand...
What you are asking is addressed on a practical level by invoice discounting or factoring facilities by banks in Ireland, except in niche circumstances (primarily international trade).

Google "Invoice Discounting", and you'll find everything you need.
 
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