Time Draft

A time draft is a negotiable instrument where payment is due at a future date or after a specified period. It allows the drawee, such as a buyer, time to arrange payment.

Banks issue time drafts for import/export transactions, providing the exporter with a guarantee of payment after the period specified on the draft. Common time frames include 30, 60, or 90 days after the date of the draft or upon presentation.

For example:

• An importer accepts a time draft dated October 1, 2023, payable in 60 days. The payment is due on November 30, 2023.
• A time draft issued to a business, payable 90 days after sight, means payment is due 90 days from when the draft is first seen by the drawee.