A bill of exchange is a written financial document that orders one party to pay a specific amount to another party at a predetermined date. It is commonly used in international trade to facilitate transactions between buyers and sellers. The document serves as a guarantee of payment, making it easier for businesses to manage cash flow and credit. Typically, a bill of exchange involves three parties: the drawer (the person who creates the bill), the drawee (the person who is ordered to pay), and the payee (the person who receives the payment). This instrument can be transferred to others, allowing for flexibility in financial dealings.