B/E AND

ACCEPTANCES
Group 2
 I,II,III. General information
A. BILL OF IV. Importances
Contents
V. Advantages and Disadvantages
EXCHANGE VI. Notable elements of B/E in Vietnam

I,II. General information

B. BANKER'S III. BA as Checks
IV. BA as Investments
ACCEPTANCES V. Advantages and Disadvantages
B/E
BILL OF
EXCHANGE
DEFINITION

is a financial instrument used in international trade and

commerce as a written order by one party (the drawer)
to another party (the drawee) to pay a specified sum of
money to a third party (the payee) at a specific future
date.
DRAWER
Parties involved

DRAWER DRAWEE PAYEE

ENDORSER/
BENEFICIARY AVALISEUR
ASSIGNER
Characteristics

Mandatoty Abstraction Circulation

Features

Means of Means of Means of proving

payment security credit
 FORMAT (1) Title
(2) Date
(1
(3) Amount, Currency
) (2)
(3) (5) (4) Maturity date
(4)
(6) (5) Number of originals

(7) (6) Pay to order of

(8) (7) The amount in words

(8) Reference to credit

(10)
(9) Drawee
(9) (10) Drawer
Types of
B/E

1 Documentary Bill 5 Clean Bill

2 Demand Bill 6 Foreign Bill

3 Usance Bill 7 Accommodation Bill

4 Inland Bill 8 Supply Bill

IMPORTANCE OF B/E
• The fixed term of payment

give assurance to the exporters of receiving a fixed

price.

• Exporter can draw up a B/E with their bank and submit it to the
importer’s bank.

gain an agreement, do not need to chase the importer for

payment in the event the company fails to honor the
agreement.

• Adequate time for payment

• Enhance the per capita income

 ADVANTAGES
OF B/E
01 03 05
Legal evidence Discounting Full credit period for
facility drawee

02 04
Fixed amount Negotiable
and date
 DISADVANTAGES
OF B/E
01 04
Limited suitability for Additional burden with bill
long-term service discounting

02 03
Drawee’s responsibility for Unsuitability for
timely payment banking services
 NOTABLE ELEMENTS OF PRACTICING
B/E IN VIETNAM
Obligation for Responsibility of
drawer
Payments
related person

• pay the sum in the B/E • The drawee must pay, or refuse to pay a B/E within 3 working days from • The drawer and endorser:
to the beneficiary the date of receipt of B/E paying the beneficiary the
• Beneficiary must deliver the B/E together with any additional sheets full sum
attached to the payer.
• pay the sum stated on such • The acceptor and
• payee must paid in full the sum stated in the B/E within 3 working days guarantor: paying the sum
bill of exchange to the
endorser or the guarantor. undertaken to accept or
• When a B/E is dishonored, the beneficiary may immediately have undertaken to guarantee.
recourse to the drawer for the unpaid amount
 BILL OF
No: 12345
FOR: (1) EXCHANGE (2)

At (3) after sight of this FIRST BILL of EXCHANGE (Second of the same tenor and date
being unpaid), Pay to order of (4) the sum of (5).
Value received as per contract No.(6) dated (7).
Drawn under L/C No. (8) dated (9) issued by (10).
DRAWER
To: (11) (12)
 BILL OF
No: 12345
FOR: USD 205,000.00 EXCHANGE HCMC, August 15th 2008

At 90 days after sight of this FIRST BILL of EXCHANGE (Second of the same tenor and
date being unpaid), Pay to order of ASIA COMMERCIAL BANK SAIGON BRANCH the sum
of US dollars two hundred and five thounsand only.
Value received as per contract No.987654321/EIX dated July 14th 2008.
Drawn under L/C No. 123456 dated July 20th 2008 issued by MAY BANK PHILIPPINE.
To: MAY BANK PHILIPPINE DRAWER
SAIGON IMPORT-EXPORT
COMPANY
BA
BANKER’S
ACCEPTANCE
DEFINITION

A financial instrument in which a bank guarantees

payment to a third party at a future date rather than
an individual account holder
 HOW DOES A B/A WORK?

1 2 3

The issuer of the BA submits a Bank verifies credit The holder of the BA can
request with the bank information, takes a deposit receive its face value at
and issues a BA for a small fee maturity or trade it at a
discount
FEATURES OF B/A

Time draft Wide acceptance

Short-term instrument Secondary market

trading

Risk reduction Credit enhancement

BANKER’S ACCEPTANCE
AS CHECKS 1
Post-dated instrument

2
Negotiability

07 /13
BANKER’S ACCEPTANCE
AS INVESTMENTS
Exchanged in a liquid secondary market and like debt instruments

• The instruments are traded through banks and securities dealers

and cannot be purchased on an exchange.

• Is sold below face value, at a discount determined by the length

of time before the maturity date.

• The holder of a banker’s acceptance can either hold the instrument

until maturity and receive the face value of the security or sell the
security before its maturity, at a discount.
 ADVANTAGES
OF BA
01 04
Low cost Liquidity is supported by a
large secondary market

02 03
The exporter is assured about The importer doesn’t have
its payment to pay in advance
 DISADVANTAGES
OF BA
01 02
The buyer may default, forcing The bank may require the
the financial institution to make buyer to post collateral before
the payment issuing the banker’s
acceptance
Q&A