Letter acceptance

banking

The acceptance of the bill of exchange is the recognition of the commitment contained in said document by the debtor. This, by signing or writing the word "I accept".

With the admission of the letter, the obligor becomes a "accepting drawee". Meanwhile, the beneficiary is called the "drawer". The accepting drawee will be obliged to pay the drawer the amount indicated in the bill of exchange on the expiration date.

Characteristics of letter acceptance

Acceptance of a bill of exchange has several aspects:

  • Duty to pay: The debtor must make the disbursement to the holder of the bill, who may or may not be the drawer of the document.
  • It can be limited: The drawee can limit the payment contemplated in the letter. That is, you can partially admit the obligation. However, any other type of modification is considered a refusal of acceptance.
  • It is not always necessary: ​​In every bill of exchange, the drawer establishes whether or not this document should be presented to the debtor for recognition.

However, it should be noted that acceptance is always required when the debt is payable at the borrower's domicile. Likewise, if the bill is drawn on a term from sight.

In the latter case, the time to comply with the payment, for example sixty days, begins to run from the moment of acceptance.

Acceptance of the letter as an endorsement for a credit

The acceptance of the letter represents an asset for the creditor of the letter. This, when applying for a loan.

To explain this statement we must remember that banks and other entities offer financing in exchange for payment orders. Thus, the amount of the approved loan can be calculated, for example, as a percentage of the amount committed in a letter.

If the bill of exchange has not yet been accepted, the credit granted will be less, because the bank is becoming the new creditor of the document.

Tags:  accounting culture Commerce 

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