What is the Difference Between Commercial Paper and Commercial Bill?
By BYJU'S Exam Prep
Updated on: November 9th, 2023
The Difference Between Commercial Paper and Commercial bills is that commercial paper is a financial instrument used by banks and financial institutions to raise funds for less than a year. Companies prefer to use these because they are considered extremely safe. Commercial bills, also known as “Bills of Exchange,” on the other hand, are financial instruments used by businesses to generate advance payment when selling goods on credit.
Table of content
Difference Between Commercial Paper and Commercial Bill
Check the major difference between Commercial paper and Commercial bills from the following table:
| Commercial Paper | Commercial Bill |
| Used by banks and other financial institutions to provide short-term investment. | Issued by the bank against the credit transactions of a firm. |
| A discounted instrument has a face value and maturity value. | Do not have a face value. |
| It is used for a short time period which is less than a year. | It is for short validity, usually 30, 60, or 90 days. |
| Banks use it to meet short-term obligations. | Companies use it to get advance money from banks for their credit sales. |
Commercial Paper vs Commercial Bill
Commercial paper and bills both differ from each other on the basis of their maturity and issuance. Banks use commercial paper to raise short-term funds, while commercial bills let companies obtain advance payment.
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