Time Draft

AAA

DEFINITION of 'Time Draft'

A type of foreign check that is guaranteed by the issuing bank, but that is not payable in full until a specified amount of time after it is received and accepted. Time drafts are a type of short-term credit used for financing transactions of goods in international trade. They allow the buyer a delay in payment after accepting a shipment of exported goods.

INVESTOPEDIA EXPLAINS 'Time Draft'

Once the buyer accepts the time draft, it becomes a trade acceptance. The exporter can hold the acceptance until maturity and be paid in full, or sell it before maturity at a discount to obtain earlier access to the funds. The time between acceptance and maturity is called "tenor" or "usance." As such, time drafts may be referred to as "usance drafts."

RELATED TERMS
  1. Tariff

    A tax imposed on imported goods and services. Tariffs are used ...
  2. Export

    A function of international trade whereby goods produced in one ...
  3. Import

    A good or service brought into one country from another. Along ...
  4. Tenor

    The amount of time left for the repayment of a loan or contract ...
  5. Usance

    1. The allowable period of time, permitted by custom, between ...
  6. Certificate Of Origin - CO

    A document declaring in which country a commodity or good was ...
Related Articles
  1. NAFTA's Winners And Losers
    Economics

    NAFTA's Winners And Losers

  2. Can Investors Trust Official Statistics?
    Economics

    Can Investors Trust Official Statistics?

  3. Investing In China
    Investing Basics

    Investing In China

  4. Material Adverse Effect A Warning Sign ...
    Markets

    Material Adverse Effect A Warning Sign ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center