Question

Need and importance of bill of exchange for hsc project

Answer 1

Exporting often involves a unique set of risks that may be unfamiliar to business owners who are used to trading domestically. Separate laws and customs between states, combined with longer and more complex transport routes and methods, can make exporting a lot more difficult than trading within a country.

A bill of exchange helps to counter some of the risks involved with exporting. Long-term trading arrangements between firms in different countries can be badly effected by exchange rate fluctuations, so the fixed payment terms laid out in a bill of exchange provides exporters with the assurance of a fixed price.

It also provides an exporter with protection. By drawing up a bill of exchange with their bank and submitting it to their importer’s bank, an exporter gains a contingent agreement that it will not have to chase its importer for payment if that company fails to honour the agreement and pay its bill.

Answer 2

Bills of exchange are transferable means which include an order to pay a specific amount to a particular personality within a specified time period. Bill of exchange is assigned by the lender to the borrower when the borrower owes money for commodities or services. The importance and need for Bills of exchange can be seen in the fact that it helps to counter some of the jeopardizes associated with exporting. Long-term selling agreements between firms of various nations can be severely influenced by the fluctuations in the exchange rates, so the determined payment terms laid out in a bill of exchange produce exporters with the confidence of a determined price.