Definition of draft

draft

A guaranteed form of payment which is issued in amounts over $5,000 (also see bank draft).

Draft

An unconventional order in writing - signed by a person, usually the exporter, and addressed to the
importer - ordering the importer or the importer's agent to pay, on demand (sight draft) or at a fixed future
date (time draft), the amount specified on its face.

Bank draft

A draft addressed to a bank.

bank draft

A guaranteed form of payment which is issued in amounts over $5,000.

Bank overdraft

Money owed to the bank in a cheque account where payments exceed receipts.

Commercial draft

Demand for payment.

Overdraft

The amount by which a check or other payments exceeds the funds on deposits.

Overdraft Protection

Is an agreement with the Bank or Financial Institution to cover overdrafts. This service will typically involve a fee and be limited to a pre-set maximum amount.

overdraft protection

A short-term source of credit which allows you to overdraw on your account up to a pre-established limit. For example, overdraft protection spares customers both the cost and the personal embarrassment of NSF cheques. Overdraft protection is attached to your PCF Chequing Account.

Overdraft System

System whereby a depositor may write cheques in excess of the balance, with the bank automatically extending a loan to cover the shortage.

Payable through drafts

A method of making payment that is used to maintain control over payments made
on behalf of the firm by personnel in noncentral locations. The payer's bank delivers the payable through draft
to the payer, which must approve it and return it to the bank before payment can be received.

Personal Overdraft Facility

A loan facility on a customers account at a financial institution allowing the customer to overdraw up to a certain agreed limit for an agreed period.

Sight draft

Demand for immediate payment.

Time draft

Demand for payment at a stated future date.

Trade draft

A draft addressed to a commercial enterprise. See:draft.

Bankers Acceptances

A bill of exchange, or draft, drawn by the borrower for payment on a specified date, and accepted by a chartered bank. Upon acceptance, the bill becomes, in effect, a postdated certified cheque.

Cash

Currency, coin, and funds on deposit that are available for immediate withdrawal without
restriction. Money orders, certified checks, cashier's checks, personal checks, and bank drafts
are also considered cash.

Current liabilities

Amounts due and payable by the business within a period of 12 months, e.g. bank overdraft, creditors and accruals.

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