A Draft or Bill of Exchange is a negotiable instrument that is payable to the seller and
drawn on the issuing bank and/or the buyer. This document is prepared by the seller, but
is analogous to a check written from the buyer to the seller. Drafts can be either "sight
drafts" where the bank pays the full amount of the draft upon the seller's representation,
of "time drafts" where the bank's obligation at the time of presentation is merely to
accept the draft for payment at a later date (e.g. 90 days after the seller's presentation).
Time drafts provide the buyer with short-term financing. Often, banks will purchase their
accepted time drafts at a discounted rate.