Business Glossary

1. drawee's promise to pay either a time draft or sight draft. Typically, the acceptor signs his name after writing "accepted" on the bill along with the date. Instead of "accepted," similar wording indicating an intention to pay would also suffice to show a desire to honor the bill at maturity. An acceptance of a bill in effect makes it a promissory note: the acceptor is the maker and the rawer is the endorser.
2. banker's acceptance.
3. binding contract effected when one party to a business arrangement accepts the offer of another. Acceptance may be in written or oral form.

bill of exchange that, when accepted by a bank, becomes a source of short-term credit for working capital rather than import or export finance. Finance bills, which usually have maturities longer than 60 days, are sometimes issued in tight money periods. They are subject to reserve requirements, unlike ordinary bankers' acceptances, and cannot be rediscounted at the Federal Reserve window. Also called a bankers' bill or working capital acceptance.

sale by a bank of its participation in a contingent obligation, for example, a bank's participation in a banker's acceptance or a standby letter of credit. The originating bank remains liable to the beneficiary for the full amount of the transaction if the obligor fails to pay when payment is demanded. These are treated as off-balance sheet transactions in computing risk-weighted capital, and are not included in a bank's equity capital under the risk-based capital guidelines.

time draft drawn by central banks in different countries and accepted by banks for the purpose of furnishing foreign exchange.

in international trade, a banker's acceptance rawn on a bank in a country other than the country of the importer or exporter, and paid in the national currency of the accepting bank. Third country acceptances, also called refinance bills, often are used by exporters to obtain bank financing at competitive rates. Since the mid-1970s, Japanese and South Koreans have financed a large portion of their exports, including exports to European countries, through bankers' acceptances denominated in U.S. dollars, which accounts for much of the growth of these acceptances in the last decade.

financial instrument normally issued by the buyer's bank in which the bank promises to pay money up to a stated amount for a specified period for merchandise when delivered. It substitutes the bank's credit for the buyer's and eliminates the seller's risk. It is used in international trade.