When the drawer makes the payment of the bill before its due date, it is called retiring the bill. In such case, the holder of the bill usually allows him discount, technically called 'Rebate'. Such rebate is calculated at a specific rate per annum for the period the payment is being made too early. The rebate is a gain to the party making the payment and an expense to the party receiving the payment.
Transaction
If y retires this acceptance before the due date to X.

There are instances when a bill of exchange is retired to be retired before the due date by mutual understanding, between the drawer and the drawee. This happens when the acceptors of the bill has funds at his disposal and makes a request to the drawer holder to accept the payment of the bill before its maturity. If the to holder agrees do so, the bill is said to have been arranged.

The below mentioned is the proforma of Bills Payable book.

Sometimes, the acceptor of the bill foresees that if may be difficult to meet the obligation of the bill on maturity and may therefore approach the drawer with the request for extension of time for payment. If its is so the of bill is to be cancelled and the fresh bill with new terms of payment is to be drawn and duly accepted and delivered twice is called renewal of the bill since the cancellation of bills mutually agreed upon noting of the bill is not required.

A bill of exchange should be duly presented for payment on the date of its maturity. In case the bill is dishonoured on due date or maturity date, it should be preferably noted by notary Public. For providing this service, a fees is charged which is known as Noting charges. Notary Public notes the following facts-
(i) Date, amount and reasons of dishonour.
(ii) If bill is not expressly dishonoured, but refused to pay, the reasons for to treat it as dishonoured.
(iii) The amount of noting charges.

Acceptance of a bill of exchange means to give the bill debits the account of receiver and treats the bill as a new type of liability called bill payable to the acceptor. The same shall be bills receivable for the drawer and bill payable for the acceptor or drawer. When an acceptance of a bill is sent to creditor, it is considered that his debt has been settle by creating a new liability known as bills Payable. Following journal entries are made in the books of acceptor or drawer are made as under-
If the time of Purchase of goods on credit-

There are two parties to a promissory note.
(i) Maker or drawer is the person who makes or draws the promissory note to pay a certain amount as specified in the promissory note. He is also called the promisor.
(ii) Drawer or payee is the person in who se favour the promissory note is drawn. He is called the promisee.

A bill is said to have been dishonoured when the acceptor fails to make the payment on the date of maturity. In this situation liability of the accepted is restored. Therefore, the entries made on the receipt of the bill should be reversed.

The term maturity refers the date on which a bill of exchange becomes due for payment. In arriving at the maturity date, three days, known as days of grace, must be added to the date on which the period of credit express instrument is payable.

Three parties involved in a bill of exchange:
(i) The drawer: The party which makes the order is known as the drawer.
(ii) The acceptor: The party which accepts the order is known as the acceptor.
(iii) The payee: The party to whom the amount has to paid is known as payee. The drawer and the payee may be the same person.

The following are the essential features of Bills of Exchange:
(i) A bill of exchange must be in writing.
(ii) It must be dated.
(iii) The order must be unconditional.
(iv) It must be for a specified amount and specified period.

Difference between bills of exchange and Promissory note:

(i) Bills of exchange,
(ii) Promissory Note.