How are bill of exchange used in trade?

A bill of exchange is a financial instrument used in trade to facilitate payments between buyers and sellers. It acts as a written order from the seller to the buyer, demanding payment at a specified future date, which helps to ensure secure transactions. This instrument can also be endorsed and transferred to third parties, providing liquidity and flexibility in trade financing. By using bills of exchange, businesses can manage cash flow and mitigate credit risk in international and domestic transactions.