Dealing with France, Italy, or Spain? What You Need to Know About Processing Bills of Exchange

  • by Roy Brookes, Senior FI/CO Consultant
  • March 15, 2005
The form of payment called bill of exchange provides a company with control over when payment is made. It is common in some European countries.
Key Concept
Bills of exchange were invented by the Lombard bankers hundreds of years ago as a safe way of transferring money in payment of goods or services. They are similar in some ways to checks but differ in others. When a customer pays by check, it is normal for him to write the check, sign it, and send it at his convenience. With a bill of exchange, a company writes the check in its own favor, sends it to the customer for his signature and return, and then presents it to the customer's bank on the due date, which is written on the bill of exchange. Therefore the company has more control over the time of presentation for payment.

The first question you might ask is, "Why in the 21st century should I be at all interested in a medieval method of payment?" Although this form of payment is never seen in the US or the UK these days, it is still common in France, Italy, and Spain, and is occasionally encountered in Austria (where a bill of exchange is known by its German name "Wechsel").

I am often asked how to set up this very effective means of getting paid in SAP FI. SAP consultants who have never worked in France, Italy, or Spain are often stuck when they come across this requirement and do not know where to start. After I give you some background about the bill of exchange, I'll show the detailed configuration steps.

Roy Brookes

Roy Brookes is a senior consultant in SAP FI/CO and a qualified accountant and business consultant. He has worked for many years in accounting, finance, and business consulting. He is an SAP expert and has designed and implemented FI and CO solutions at the European and country level during the European rollouts of SAP R/3 in a number of multinational companies. He has also worked in the US and Turkey.

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