Bills of exchange are financial documents that require the individual or business that is addressed in the document to pay a specified amount of money on a date that is cited within the text of the document. Considered to be a negotiable instrument, the date for the demand to pay generally ranges from the current date to a date within the next six calendar months. A bill of exchange will also require the authorized signature of the debtor in order to be considered legal and binding.

As an unconditional order to pay a fixed sum of money to a creditor, the bill of exchange can take on many different forms. One of the most common examples of the bill of exchange is the common bank check. A check specifies who is to receive the funds, with the order to pay the face value of the check to the order of the creditor. The exact amount of the payment is specified. The date specified on the check is often the issue date for the check, but may also be the date that the bank is to honor the payment. This process is referred to as post dating a check, since the creditor will physically receive the check at some time before it will be honored.

It is also possible to establish a bill of exchange in the form of a bank draft. Like the bank check, drafts are normally set up with a fixed sum of payment, and with specific instructions of when to issue the payment to the creditor.

The bill of exchange can be a very simplistic document, or one that is very detailed. In many countries around the world, the use of a bill of exchange is a common means of conducting business, and is often accompanied by an allonge. In situations where the bill of exchange is not honored, the holder of the document is free to take legal action against the debtor according to local laws, or to sell the bill of exchange to a collector at a discounted rate of exchange.