Trade acceptance drafts: The third payment option

The Trade Acceptance Draft (TAD) Program, offers an advantageous third payment option to typical cash (COD) or open account terms for commercial transactions, satisfying the needs of both the buyer and supplier.

The concept of the Trade Acceptance Draft has existed in Europe for years. In England

they are called bills of exchange, in France traits and in South Africa bulls. Introduced to the American business community in 1993, Trade Acceptance Drafts are negotiable instruments, signed by the buyer and made payable to the supplier. Each individual TAD states the amount due, the date it is due for deposit and the buyer's bank information. When the commercial transaction is complete and the buyer has accepted the goods or services, the buyer signs and delivers the TAD to the supplier as payment.The TAD is then sold to our company,Actrade, and payment is advanced to the supplier within 48 hours. We then debit the draft amount on the predetermined due date directly from the buyer's bank account. In essence, the supplier receives immediate payment-fewer fees-and virtually eliminates credit risk and collection responsibilities. This allows the supplier to extend more credit to its buyers and therefore increase sales. The buyer also receives benefits, including extended terms that generally do not require collateral up to six months.This combination proves to be very powerful for many companies financing business-to-business transactions. By allowing a buyer to make extended payments over a period of time without having to commit funds for collateral, the TAD Program enables a purchase to take place without putting a strain on working capital.