To date, there are many options for debt securities, including a bond receipt, a loan agreement, a loan agreement without interest, and a bill. The latter occupies a special place, since it belongs to the number of securities and is regulated by certain laws. Let us consider in more detail what a bill of exchange is and what are its features. And also analyze whether it is profitable to deal with bills in practice.
The concept of "bill of exchange"
A bill of exchange is a security issued in a specific form, certifying the transfer of one obligation to another. This document gives the right to the person to whom the bill was transferred to receive debt from the debtor within the time agreed in advance. What is a bill in simple words? This is a type of debt paper certifying the right of the billholder to demand the amount of debt from the person who issued the bill back at the time and place indicated in the contract.
At its core, a bill refers to order securities. The holder here is indicated in the bill itself or replaced with a transfer endorsement, where a new holder is already registered. As for the endorsement, it can be both blank and bearer. If we consider what a bill of exchange is from the position of securities, then it may well be a registered document. In this case, the bill cannot be transferred to another person, only according to the rules of the assignment.
Historical facts
Oddly enough, but transactions with bills were carried out for a very long time, since the bill is considered one of the oldest instruments in the field of finance. Even in ancient Greece and in Rome there were analogues of a bill - a singraph and a chirograph. Ancient China also did not lag behind in this regard, where they came up with Feiqian to transfer large sums of money. Arab prototypes of the bill are documents of Suftej and Hawala. According to historians, it was they who had a significant impact on the appearance of the original forms of bills in Italy in the 13th century. Not surprisingly, words such as “endorsement” and “aval” have Italian roots. Subsequently, from a simple receipt, the bill “grew” into paper that accompanied the currency exchange.
Due to its convenience, the bill quickly gained popularity and widespread distribution in European countries. The circulation of bills rapidly increased in volume, which prompted the writing of the first Charter on bills in the city of Bologna in 1569. According to the first rules, the bill holder was not entitled to transfer the bill to another person. However, in order not to restrain trade routes and developing relations, this restriction was lifted at the beginning of the 17th century.
History of a bill in Russia
A little later, namely at the beginning of the 18th century, a bill appeared on the territory of Russia due to the establishment of trade with Europe. In particular, the German principalities introduced the term "bill" (Wechsel) into the Russian language, which translated meant "transition" or "exchange." German laws influenced the content of the first Russian Charter of 1729, which regulated bill relations. However, at that time a simple and transferable bill of exchange acted unevenly in Russia. Among Russians, a promissory note was more prevalent, which was used in obtaining loans. And in the charter, the rules regarding the bill of exchange were described in more detail. Such a mismatch of laws and realities led to the fact that a new bill charter was issued almost a century later. This time a lot was borrowed from the French code of commerce. However, again, most of the document was devoted to a bill of exchange. After many editions and alterations, the charter was reprinted in May 1902. What is a bill of exchange in this document? Here it was a bill of exchange as an obligation of the drawer to deliver to the drawer a known amount of cash. This bill charter existed only until the Revolution of 1917, and later all operations with bills were severely reduced.
Legislative framework
To date, the Federal Law is in force in the Russian Federation, which enacted the Regulation on a promissory note and a bill of exchange, and also indicates the group of persons entitled to use bill transactions. The law also lists all the necessary details that must be affixed in debt paper. They are put on plain paper, but more often they use preprinted letterhead bills issued by the state treasury.
In the United Kingdom, the United States, Canada, and Australia, to date, financiers have used the English Law of 1882 in their activities. The Geneva Convention has very similar provisions to this law. In some states, such as Spain, Egypt, etc., other norms of bill circulation are practiced.
Types of bills
Two main varieties of the described security are known - this is a simple and bill of exchange. The most popular and traditional type is a promissory note. In this case, the debtor is the person who wrote the bill.
A bill of exchange differs significantly in several ways. Here, the debtor is a third party in arrears to the person who issued the bill. A debt can be a debt receipt or a loan agreement. In fact, a person, writing a bill, fulfills obligations to the bill holder and at the same time “liquidates” the debt of his debtor, now transferring it to the holder of the issued paper.
In simple words, when using a promissory note, the participation of only two parties is required - the debtor and the one to whom they owe. And with a bill of exchange it is necessary that three persons participate: the payer, the drawer and the one to whom the required amount is paid. In the Russian Federation, payment of a bill of exchange and any other circulation is regulated by bill of exchange law, and at the global level - by clauses of international law (or an international convention).
Tasks of a bill of exchange and transfer of rights
The main task of a bill in the financial field is to simplify debt procedures, that is, now the fact of a debt obligation is immediately considered proven at a legal level. If a person issues a bill of exchange, a sample of which is in the article, then he thereby enlisted himself in the ranks of debtors.
How can I transfer the right to a bill? Unlike other securities, transfer takes place by the endorsement method - by endorsement. So, any person whose signature is indicated on the back of the bill can then be involved in the payment of debt. An aval is usually placed on the front side of a bill of exchange - this is a guarantee for a security. Any signature on the front side is considered to be an aval if it is not a note of the drawer or payer.
Features
Since the bill is a security, it is inherent in free circulation and many other features of valuable financial documents. However, there are differences.
One of the clear advantages of a bill is its indisputability. This means that the requirements of the bill holder are considered absolutely unconditional to full speed execution. Another feature is abstraction, which emphasizes that the nature of obligations is purely monetary. Solidarity is also inherent in the bill. All persons who take part in the circulation of this paper are not exempted from full financial responsibility. As for the documentary nature of the bill, there are disputes: some believe that existence only in paper form protects it from fakes, while others, on the contrary, speak about weak protection.
Registered and order papers
There are registered and order bills (or they are called "bearer"). In the latter form, the maturity of a bill may be indicated upon presentation, on a specific day, at a specific time from presentation, or at a specific time from compilation.
In what cases is interest accrual possible? Only if the paper is written out with payment of the debt amount upon presentation or at the agreed time from presentation. In all other situations, interest cannot be calculated. There is also the opportunity to receive a bill of exchange income in the form of a discount. Many merchants themselves draw up a bill or use ready-made blanks of bills, where it is enough to enter the exact data.
Presentation of Bills
According to the letter of the law, a bill must be presented on the day of payment or within two days from the specified date. In the event that the payment of the bill did not pass, a protest should be made. Interestingly, a bill of protest can be carried out simply by contacting a notary public without detailed consideration in court. The judge immediately makes a decision and issues an order, according to which there is a recovery from the debtor. For example, if a person comes to the bank and presents a bank bill, then the institution must pay on time, otherwise there will be a lot of problems and proceedings, which will negatively affect the image.
Payment Principles
The bill payment procedure consists of the following steps. First, a bill of exchange is presented for payment on a specified date. If the date occurred on a day off, then payment must be made no later than the first working day. Then comes the immediate payment by the debtor of the amount agreed on in the bill of exchange without any deferrals. The latter are legally permitted only in unforeseen circumstances. The debtor has the right to pay only part of the amount indicated in the document, and this must be noted. If you decide to present the bill early, then this fact does not oblige you to pay immediately, you should wait for a specific repayment time.
Operations with bills
It is no secret that the bill is in the top of the most common financial documents used by Russian firms and companies in their commercial activities. The most unique thing about working with a bill is that it can act both as a means of settlement and as a means of lending. Often between organizations for some goods or services payment is made by bill of exchange.
Also, any company may well write out its own bill of exchange for a specific amount if it takes money from another person on loan. Many manage to make money on bill circulation by buying up such securities, and then receiving considerable interest. Organizations often purchase bills from the drawer himself, and sometimes resort to secondary market services and buy from third parties.
In practice, bills of exchange are used to accumulate money or as a payment instrument. In the first case, discount bills issued by the bank are good help. And in the second - the bill can be used as payment for a large purchase or payment for construction and at the same time avoid high bank commissions.
Bank bills
The bill is not an issue of securities. Due to this fact, there is no need for registration at the state level. That is why many banks in the Russian Federation often use a bill of exchange as a financial instrument similar to a deposit. The difference between him and the deposit is that he does not participate in insurance of cash deposits. What is a bank bill? This is a debt obligation in the form of a security issued by a banking institution to pay a person indicated in it or according to his order a specific amount of money in a certain number. Promissory notes of the largest banks of the Russian Federation in terms of liquidity are not inferior to cash. Consequently, it is profitable for enterprises to keep their funds in bills - financial discipline is improved and misuse of money is reduced. The plus is that it is possible to pay for work or goods with a bill of exchange. However, not everyone can accept bills as payment. It is worth noting protection against theft of funds. Even if someone steals the bill of exchange, he will not be able to receive money from it, since a specific legal entity or individual is put on the form.
