What are Wachovias procedures on deferred payments and discounting?
A Banker’s Acceptance (BA) is a method of financing Wachovia may provide to its customers to support their short-term (six months or less) trade transactions. A Banker’s Acceptance is a time draft drawn on, and accepted by, a bank. The bank, as drawee of the draft, indicates its acceptance of the obligation by stamping the word “accepted” on the face of the draft, dating and signing it. By accepting the draft, the bank signifies its commitment to pay the stated amount of the draft on a specified future date. The company for whom the draft is accepted (drawer) may have the draft held until maturity to collect the full amount, or may discount the acceptance and collect immediate payment, less applicable discount rate. BAs typically arise out of one of the following situations: 1. Banker’s Acceptance under a Letter of Credit – Wachovia accepts a time draft drawn on itself by a beneficiary under a letter of credit, considering the credit specifies that drafts are to be drawn on Wachovia. T
