Payment can be made before or after purchase using physical cash, cheques, bills of exchange, promissory notes, money orders, post office cheques, or bank drafts.
Cheques
A written instruction to a banker to pay a certain sum to the person named on it. A cheque has three parties: the drawer (who issues it), the drawee (the bank), and the payee (who receives payment). It must show the amount in figures and words, the drawee, payee, date, and signature.
Bills of Exchange
A written and signed order from the drawer to the drawee, asking them to pay the payee (or bearer) a set sum on demand or at a fixed future date. It is used in both home and foreign trade to settle debts, and is negotiable — it can be transferred between people.
Promissory Notes
An unconditional promise written and signed by one person (the maker) to another (the payee), to pay a set sum on demand or at a fixed future date. Unlike a bill of exchange, it is not negotiable and cannot be discounted.
Money Order (Mandate)
An instruction issued by the post office to pay a specific sum to a named person, within the same country or abroad (e.g. Express Exchange or Express Union mandate).
Bill of Exchange vs Promissory Note
| Bill of Exchange | Promissory Note |
|---|---|
| 3 parties (drawer, drawee, payee) | 2 parties (maker, payee) |
| An unconditional order to pay | An unconditional promise to pay |
| Requires acceptance from the drawee | No acceptance required |
