A Time Draft (also called Usance Draft) is a bill of exchange in international trade that is payable at a specified period after the date of issue or after sight (e.g., 30, 60, or 90 days), as opposed to a Sight Draft. It is commonly used when the exporter provides financing to the importer, in open account sales, or under documentary collections (D/A) and letters of credit (L/C). Use cases include: the exporter allows deferred payment to enhance competitiveness; or the buyer needs cash flow flexibility. Precautions: (1) The starting date for the payment period (date of issue or date of sight) must be clearly specified; (2) Acceptance is required to establish payment liability; (3) There are exchange rate and credit risks; the exporter may consider discounting or obtaining export credit insurance; (4) Under an L/C, the time draft must comply with UCP600. Difference from a Sight Draft: a sight draft is payable on demand, while a time draft allows deferred payment. Difference from a true usance draft: a Banker's Acceptance carries higher credit standing.
📝 Examples
1. We agree to accept a time draft payable 60 days after sight; please make payment on time after acceptance. (Note: The exporter grants the importer a 60-day credit term and requires acceptance of the time draft.)
2. The letter of credit requires presentation of a time draft, payable 90 days after the bill of lading date; please issue the draft accordingly. (Note: The L/C specifies that the payment period for the time draft starts from the bill of lading date, with a term of 90 days.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
For unfamiliar terms, use GlobalSync's multilingual email helper to confirm with your partner