"A bill of exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument." (Section 5 of the Negotiable Instruments Act, 1881).
Advantages of Bills of Exchange: The following advantages accrue from bills of exchange:
(i) Purchase and sale of goods on credit:
With the help of bills of exchange, goods can be sold and purchased on credit without difficulty since the bills of exchange contains an unconditional promise to pay.
(ii) Discounting facility:
The bills of exchange can be discounted at a bank, so that the firm allowing the credit can receive cash immediately without the debtor having to pay before time.
(iii) Easy to recover the amount:
If a bill of exchange is dishonoured, it would be easier to recover the amount legally than in the case of an ordinary debt.
(iv) Endorsement:
A bill of exchange can be endorsed to other parties; thus they serve almost the same purpose as cash.
(v) Certainty as to payment:
The date of payment is certain, so the firm which has to pay and that which has to receive the amount, can thus plan cash operations.
(vi) No reminder to debtor:
The recovery of the debt is possible without having to remind the debtor.
(vii) Convenient means of remittance in foreign trade:
In foreign trade, bills of exchange are of great assistance in enabling firms to make and receive payment. It, thus, avoids the risks of carrying the currency to different places of trade.

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.