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Getting paid · 13

Bill of exchange (draft)

A written order asking the buyer (or bank) to pay a sum on sight or on a future date. Used with DP, DA and many LCs.

DRAFTSample — made-up names and figures
Draft no.
BOE/0001
Amount
USD 20,000.00
Tenor
60 days from BL date
Drawer
Sharma Agro Exports, Indore
Drawee
Al Noor Foodstuff LLC, Dubai
Through
Example Bank, Indore branch (collection)
Issued by
The exporter, drawn on the buyer or the buyer's bank
Used in
Exports

Why it matters

Under DA, the buyer's signed acceptance of the draft is their legal promise to pay on the due date.

What goes on it

  • Amount in figures and words, currency
  • Tenor: at sight or a number of days after BL/sight
  • Drawer (you), drawee (buyer or bank), payee
  • LC or invoice reference, date and signature

Avoid these mistakes

  • The amount must not exceed the invoice or the LC balance.
  • Your bank usually supplies the format — use it.
Sources (1)
  1. DGFT — Beginners guide to Trade Finance