What’s an example of a bill of exchange?

Suppose company XYZ purchases $100,000 worth of goods from company ABC. Company ABC draws up a bill of exchange, which makes company XYZ the drawee and company ABC, the drawer.

It may specify that company XYZ must pay $100,000 to company ABC within 60 days. If company XYZ does not make payment within that time period, interest may accrue on the outstanding balance (the rate must be specified).

In 60 days, company ABC will leverage its rights and demand payment. If company XYZ is unable to pay, company ABC can pursue litigation for payment.