bill of exchange

bill of exchange
A short-dated security issued to finance foreign trade. The customer pays an exporter not in cash but with a bill payable in usually 3 or 6 months. This can be sold in the discount market to provide immediate cash for the supplier. If the customer is not well known, a bill can be made more marketable by acceptance by a merchant banker, who adds a signature to the bill guaranteeing payment if the issuer should default.