Definition

1. Noun:
   • A financial instrument: A "trade acceptance" is a specific type of bill of exchange. It is a written order used in commerce, where the seller of goods (the drawer) instructs the buyer (the drawee) to pay a specified sum of money at a future date. The key feature is that it is created for a particular purchase and is formally accepted for payment by the buyer, whose signature ("acceptance") makes it a binding obligation.

Examples of Usage

• Noun:
  • The exporter requested payment via a trade acceptance to secure the transaction.
  • By signing the trade acceptance, the buyer formally agreed to pay the invoice amount in 90 days.
  • The company used a trade acceptance to finance its inventory purchase.

Advanced Usage

• "To discount a trade acceptance": This refers to the practice of selling the acceptance to a bank or financial institution before its maturity date for immediate cash, at a value less than its face amount.
  • The seller needed immediate funds, so they chose to discount the trade acceptance at their bank.

Variants and Related Words

• Acceptance (n): The act of formally agreeing to the terms of a draft or bill of exchange, often by signing it. This is the core action that creates a trade acceptance.
• Bill of exchange (n): A broader category of financial instruments; a written order from one party (drawer) to another (drawee) to pay a specified sum to a third party (payee). A trade acceptance is a specific type of bill of exchange.
• Draft (n): Another term for a bill of exchange.

Synonyms

• Accepted bill: A general term for any bill of exchange that has been signed by the drawee, accepting the obligation to pay.
• Commercial draft: A draft arising from a commercial transaction, which includes trade acceptances.

Related Terms (Contextual)

• Drawee: The party (the buyer) who is ordered to pay and who must accept the instrument.
• Drawer: The party (the seller) who creates and issues the order to pay.
• Maturity date: The future date on which the payment specified in the trade acceptance is due.

Noun

1. a bill of exchange for a specific purchase; drawn on the buyer by the seller and bearing the buyer's acceptance