Time draft is a draft that allows for a delay in payment.
A time draft is a type of payment document whereby a buyer accepts shipped goods and agrees to pay the seller at a specified future date. It is a type of short-term credit used to finance international transactions. A time draft is also a guaranteed payment to the seller by an issuing bank.
The draft is ratified by the payee, making it renegotiable. If the buyer is successful in securing longer payment terms, the payment should be referred to as a time draft. After receiving the paperwork at his bank, the drawee in this case approves the draft.
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