BILL OF EXCHANGE
A non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date.
Bills of exchange are similar to checks and promissory notes. They can be drawn by individuals or banks and are generally transferable by endorsements. The difference between a promissory note and a bill of exchange is that this product is transferable and can bind one party to pay a third party that was not involved in its creation. If these bills are issued by a bank, they can be referred to as bank drafts. If they are issued by individuals, they can be referred to as trade drafts.

ADVANTAGES OF USING BILL OF EXCHANGE

* Bill of exchange fixes the date of payment. The creditor knows when to expect his money and the debtor also knows when he will be required to make payment. * A bill of exchange is a negotiable instrument and can be used in settlement of debts. * it is a written and signed acknowledgement of debt and affords conclusive proof of indebtedness. * A debtor is free from worries and enjoys full period of credit, as he can never be called upon to pay the amount of the bill before the due to date. * A creditor can convert the bill into cash by getting it discounted with the bank.

SHIPMENT INVOICE

This a general accounting of items sent from one individual or company to another. Standard information includes the name and location of the person or organization sending the goods as well as the name and location of the receiving party.
PRO FORMA INVOICE An abridged or estimated invoice sent by a seller to a buyer in advance of a shipment or delivery of goods. It notes the kind and quantity of goods, their value, and other important information such as weight and transportation charges. Pro forma invoices are commonly used as preliminary invoices with a quotation, or for customs purposes in importation. They differ from a normal invoice in not being a demand or request for payment.

WHY DO SUPPLIERS ISSUE PROFORMA INVOICE

1. A pro forma invoice may be raised when a supplier is effectively providing a quotation to a customer. For, a new customer wants to buy goods and wants to receive them quickly. This means that the supplier does not have time to do a proper credit check. However, the supplier also does not wish to sell goods on credit to an unknown customer, for fear of suffering a bad debt 2. A pro forma invoice may be raised in respect of renewal notice,such as a subscription to a magazine