DEFINITION of 'Payable Through Draft'

A draft that is payable through a specific bank. Payable-through-draft instruments draw money from the account of the issuer. Corporations use these instruments to pay bills, and insurance companies use them to pay claims.

BREAKING DOWN 'Payable Through Draft'

The bank's name is printed on the face of the draft. However, it does not verify either the signature or the endorsement; this is the responsibility of the issuer. Credit union share drafts are also payable-through-draft instruments, usually cleared by a correspondent bank.

RELATED TERMS
  1. Treasurer's Draft

    A type of bank draft that is payable through a designated bank. ...
  2. Bank Draft

    A type of check where the payment is guaranteed to be available ...
  3. Demand Draft

    A method used by individuals to make transfer payments from one ...
  4. Foreign Draft

    An alternative to foreign currency. A foreign draft is a bank ...
  5. Share Draft

    A type of draft used in credit unions as a way to access funds ...
  6. Time Draft

    A type of foreign check that is guaranteed by the issuing bank, ...
Related Articles
  1. Personal Finance

    What's a Bank Draft?

    A bank draft is a type of check. The bank guarantees payment, making it a more attractive option for the check recipient.
  2. Investing

    Understanding Financial Instruments

    Financial instrument is a general term used to describe a monetary asset.
  3. Investing

    What are Debt Instruments?

    A debt instrument is a documented financial obligation that enables the issuer to raise funds by borrowing money and repaying it in the future.
  4. Personal Finance

    Banker's Acceptance 101

    A banker's acceptance, a common way of financing international trade activity, provides a relatively safe, short-term vehicle for investors. An acceptance is a negotiable time draft that a bank ...
  5. Investing

    Bill of Exchange

    A bill of exchange is a document used in international trade to pay for goods or services. It is signed by the person promising to pay, and given to the person entitled to receive the money. ...
  6. Trading

    Arbitrage

    Learn more about this trade that profits from price differences between financal instruments and markets.
  7. Investing

    Debentures

    Learn more about this type of debt instrument.
  8. Investing

    Did Derivatives Cause The Recession?

    We may never come to a consensus on what caused the financial collapse, but derivatives definitely share a large part of the blame.
  9. Investing

    Days Payable Outstanding

    Days Payable Outstanding, or DPO, is an accounting measurement that tells the average number of days it takes a company to pay its suppliers and vendors. Days Payable Outstanding is widely used ...
  10. Financial Advisor

    Why Cash is King When Markets are Volatile

    After the past several years, you might be addicted to equity. But when markets turn volatile, cash is the best option. Here's why.
RELATED FAQS
  1. Are accounts payable a liability?

    Take an in-depth look at accounts payable, or trade payable, an important current liability account listed on a company's ... Read Answer >>
  2. Are accounts payable counted as revenue?

    See how accounts payable is treated on the balance sheet, and why it is considered an expense and liability rather than revenue ... Read Answer >>
  3. Are accounts payable an asset?

    Find out why the general ledger accounts payable is considered to be a current liability, not a current asset, and how it ... Read Answer >>
  4. Why are insurance companies and pension funds considered financial instruments?

    Find out why insurance companies and pension funds are considered carriers of financial instruments, and what role they play ... Read Answer >>
  5. Where on the Internet can I find free sample templates for a bill of exchange?

    Understand the concept behind a bill of exchange, and learn about websites on the Internet where you can find free sample ... Read Answer >>
Hot Definitions
  1. Treynor Ratio

    A ratio developed by Jack Treynor that measures returns earned in excess of that which could have been earned on a riskless ...
  2. Buyback

    The repurchase of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies ...
  3. Tax Refund

    A tax refund is a refund on taxes paid to an individual or household when the actual tax liability is less than the amount ...
  4. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced within a country's borders in a specific time period, ...
  5. Inflation

    The rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of ...
  6. Merchandising

    Merchandising is any act of promoting goods or services for retail sale, including marketing strategies, display design and ...
Trading Center