Definition

Noun: A time draft is a formal, written order for the payment of a specified sum of money. Unlike a demand draft, which is payable immediately upon presentation, a time draft is payable at a specific, predetermined future date.

Usage

A time draft is a financial instrument used primarily in trade and commerce. It directs one party (the drawee) to pay another party (the payee) a set amount on a specified future date. It is often used to provide the seller with a payment guarantee while giving the buyer time to generate funds from the sale of goods.

Examples

• The exporter requested a time draft payable 90 days after shipment to secure the transaction.
• The bank accepted the time draft, agreeing to pay the amount on the maturity date stated on the document.
• Payment for the machinery will be made via a time draft due in six months.

Advanced Usage

• Acceptance: A time draft becomes more secure when it is "accepted." This occurs when the drawee (often the buyer or their bank) writes "accepted" across the draft, signs it, and specifies the payment date, thereby formally agreeing to the obligation. This creates an , or more specifically, a if a bank is the acceptor.
• Tenor: The period until the draft's maturity (e.g., 30 days, 60 days, 90 days) is known as its .

Variants and Related Words

• Usance Draft: A synonym for a time draft, commonly used in international trade.
• Sight Draft: A related but contrasting instrument; a draft that is payable immediately ("on sight") upon presentation to the drawee.
• Trade Acceptance: A specific type of time draft that arises from a sale of goods, where the buyer (the drawee) accepts responsibility for payment.
• Bill of Exchange: A broader term; a time draft is a specific type of bill of exchange with a future payment date.

Synonyms

• Term draft
• Usance bill (or draft)
• Date draft

Antonyms

• Sight draft
• Demand draft

Noun

1. a draft payable at a specified future date