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Information > Financial Terms > This page

Foreign Bills of Exchange

Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)
      

First read BILL OF EXCHANGE

Bills of exchange drawn on a foreign drawee and payable in a foreign country.  They are the chief means by which settlements are made in international trade.  Foreign bills of exchange are classified in many different ways, giving rise to much confusion among laypeople because these classifications are not mutually exclusive but, in fact, overlap.

Five important classification schemes follow:

  1. As to class of maker.

  1. Government or official bills.

  2. Bankers' bills (including traveler's checks).

  3. COMMERCIAL BILLS.

  4. Express company drafts.

  5. Shipping bills.

  6. Postal money orders.

  1. As to maker's purpose and types of transactions out of which bills arise.

  1. Drawn against funds, balances, or accounts.

  1. Cables.

  2. Checks.

  3. Commercial bills.

  1. Drawn for borrowing purposes.

  1. FINANCE BILL.

  2. Reimbursement bills.

  1. Drawn against merchandise.

  1. Cotton bills.

  2. Steel bills.

  3. GRAIN BILLS.

  4. Breadstuffs bills.

  5. Machinery bills, etc.

  1. Drawn against services.

  1. Ocean freight bills.

  2. Marine insurance bills.

  3. Bankers' commissions bills.

  4. Merchants' commissions bills.

  5. Masters' drafts.

  1. Drawn against securities.

  1. Purchase and sale of stocks and bonds.

  2. Dividend and interest remittances.

  1. As to security.

  1. Clean bills.

  2. DOCUMENT BILLS (shipping documents attached).

  3. Bills with securities or other valuable documents attached (including insurance policies, matured coupons, bonds, mortgages, etc.).

  1. As to maturity (time of payment).

  1. Cables.

  2. Sight, demand, or presentation bills (checks).

  3. Arrival bills (shipping documents attached).

  4. Time bills.

  1. Short bills (less than 30 days after sight or date).

  2. Long bills (30 days or more after sight or date).

  3. Days after date bills.

  1. As to domicile (place of payment).

  1. Domestic bills in foreign currency.

  2. Foreign bills payable in:

  1. Dollars.

  2. Sterling.

  3. European decimal currencies.

  4. Other countries.

None of the above classifications is mutually exclusive; it is possible, for instance, to have a 60-day sight bill, drawn in sterling on a commercial house, supported by documents growing out of a shipment of cotton, and payable in London.  This may be referred to as a foreign bill, sterling bill, commercial bill, documentary bill, long bill, time bill, or cotton bill.  It is each and all at the same time.

The following is a general classification of foreign bills:

  1. Commercial bills.

  1. Documentary bills.

  1. Short (demand or within 30 days sight):

  1. Documents against acceptance bills:

  1. Discountable abroad.

  2. Held abroad until maturity without discount.

  3. Not discountable abroad because not in native currency.

  1. Documents against payment bills not discount able abroad.

  2. Documents on arrival not discountable abroad on account of indefinite maturity.

  1. Long (30 days sight or more):

  1. Documents against acceptance bills:

  1. Discountable abroad.

  2. Held abroad until maturity without discount.

  3. Not discountable abroad because not in native currency.

  1. Documents against payment rarely over 90 days.

  2. Days after date bills:

  1. Discountable abroad.

  2. Held abroad until maturity without discount.

  3. Not discountable abroad because not in native currency.

  1. Clean bills.

  1. Cables.

  2. Checks.

  3. Sight, demand, or presentation bills.

  4. Time bills:

  1. Discountable abroad.

  2. Held abroad until maturity without discount.

  3. Not discountable abroad because not in native currency.

  1. Banker's bills.

  1. Tenor (term).

  1. Cables.

  2. Checks.

  3. Short bills (within 30 days sight).

  4. Long bills (30 days sight or more).

  1. Purpose.

  1. Against current balances.

  2. Against open credits finance bills.

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