What is the difference between commercial paper and commercial bill?

Commercial paper and commercial bill are both financial instruments used by banks . Given below are the points of difference between them –

Commercial Papers Commercial Bills
  • Commercial paper is used by banks to raise finances for a short time period, usually less than a year.
  • It is a discounted instrument having a face value and a maturity value. 
  • Commercial bill is an instrument that helps companies to get advance payment for the invoices they raise after making sales to their customers.
  • Commercial bills are issued for financing needs of the medium term.
  • It comes into effect only after a sale has taken place.

Further Readings – 

  1. Types of Cheque in Indian Banking System
  2. Chequebook Diplomacy
  3. Financial Market

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