Maturity of Acceptances

Time drafts must indicate payment at a fixed or a determinable future period in time. This is called the tenor of a draft. An example of a fixed future time is a draft drawn on April 1, 20XX, specifying payment on May 1, 20XX. Most time drafts, however, specify payment on a determinable future time. Various determination type tenors are as follows:

• Thirty days sight (30 d/s). This means the determined payment date would be 30 days after the date of acceptance on the draft. Thus, if a draft was drawn on April 1, 20XX, and accepted on April 15, 20XX by the drawee, the determined date of maturity would be May 15, 20XX. 
• Thirty days date (30 d/d). The determined payment date under this method would be 30 days after the date of the draft. For instance, a draft dated /drawn on April 1, 20XX and accepted on April 15, 20XX by the drawee would mature on May 1, 20XX. (Note that, all other factors being equal, drafts payable "n" days after date will almost always mature prior to a similar tenor draft payable "n" days after sight.)
• Thirty days after the Bill of Lading date. This means that the draft is payable 30 days after the "on board" date if a marine Bill of Lading, or 30 days after the date the shipment was made by the carrier in the case of truck, railroad or air shipments. However, this type of tenor is not determinable unless the draft also shows on its face the Bill of Lading date or date of receipt by the carrier. If the Bill of Lading was dated April 1, 20XX, and in order to determine the maturity date, the tenor would have to state: "30 days after B/L date of April 1, 20XX." 

If the draft were being drawn under a Letter of Credit,  the preferred method would be to have the date of creation the same as the "on board" date on the Bill of Lading [B/L].   Attaching a B/L copy to the draft is not the correct procedure since the draft must project a tenor that is determinable by viewing the face of the draft itself. Thus, it is necessary to specify the B/L date on the draft. In order to avoid a long tenor, many drawers employ a simple dated draft with the date of the draft the same date as the B/L. 

Another method would be to simply insert a fixed payment due date such as a tenor of May 1, 20XX.

Note: The examples above show 30 days as the number of days for projection. This number can vary. It can be 15 days, 45, 60, 90, 120, 150, 180, and so on. There is actually no restriction on the number of days, however acceptance financing is usually six months (180 days) or less with rare projections toward one year.

Draft tenors must always be fixed maturities or capable of being projected or calculated to a definite maturity. A draft tenor can never be ambiguous or based on a contingency. Examples of inappropriate tenors would include:

• 30 days after the ship arrives;
• 60 days after merchandise is accepted; 
• 45 days from the delivery date; 
• 15 days after the buyer has sold at least 50% of the merchandise delivered

Edited by Michael C. Dennis, author of "Credit and Collection Handbook"