A time draft is a variation on the bill of exchange concept, where payment is due on a readily determinable future date. For example, a bill might be payable 10 days after presentment and acceptance. Time drafts are primarily used in transactions that cross national borders, where the buyer needs time to liquidate purchased goods in order to have sufficient cash to pay the seller. A time draft is also known as a usance draft.
This approach varies from a sight draft, which requires payment at the time of presentment.