Bill of Exchange / Draft
Category: Payments
Also searched as: Trade draft
Definition (plain English)
A bill of exchange or draft is a written payment order used in trade collections or credit terms, instructing a party to pay a stated amount at sight or on a future date.
Why it matters commercially
Draft wording, maturity, acceptance, and recourse determine whether documents can be released and how much payment risk the seller keeps.
Example
Under D/A 60 days, the buyer accepted a time draft before receiving documents, giving the seller a payment promise but not cash at release.
Common mistake
Treating an accepted draft as cash or a bank guarantee without checking buyer credit, maturity date, collection bank role, and enforceability.
Use this in CommerceKit
Payment Terms Cost / Risk Calculator
Use tool →