📄 Trade Acceptance
US Capital Private Bank Knowledge Base
Definition:
A Trade Acceptance is a draft drawn by the seller of goods on the buyer, which the buyer formally accepts, agreeing to pay the amount at a specified future date.
Key Points:
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It functions as a negotiable instrument that obligates the buyer to pay the seller.
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Upon acceptance, the draft becomes a legally binding promise to pay.
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Commonly used in commercial transactions to provide deferred payment terms.
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The seller can hold the acceptance until maturity or sell it in the market at a discount for immediate funds.
Related Terms:
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See also Acceptance — the act of agreeing to pay the draft.
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Often used alongside letters of credit or other trade finance instruments.
Importance:
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Facilitates trust and flexibility in trade by allowing buyers to delay payment while assuring sellers of future receipt.
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Helps in cash flow management for both buyers and sellers.
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