Usance Draft is a term draft, a written demand for payment that comes due at a specified future date.
It also is a contract that allows a delay in payment. Once accepted, becomes a bankers’ acceptance. Once drawn on and accepted by a business firm, becomes a trade acceptance.
It is also known as a time draft. According to financial-dictionary.thefreedictionary.com, a usance draft refers to- “A check or other draft that is not payable to the payee until a stated date in the future.” Or,
“A draft that is payable a certain number of days after it has been presented.” It differs from a sight draft because there the payee can demand payment upon presenting the draft to the proper or appropriate party. There is no term regarding any specific date in the future.
In plain words, the usance draft means the demand for payment at a mentioned future date.
Use of the term in Sentence:
- The professor is discussing the usance draft and the terms and conditions related to it in the Banking and financial institution management class.
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