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Bill of exchange (draft) in export: how to fill it in for D/P, D/A and LC

A bill of exchange, called a draft in trade finance, is the exporter's written order to the buyer or a bank to pay a sum on demand or at a set future date. It is used in documentary collections (D/P and D/A) and in letters of credit available by acceptance or negotiation, and small mistakes in it, such as a wrong tenor or amount, cause discrepancies.

Checked against official sources: 2026-10

At a glance

Definition (UK)An unconditional order in writing, signed by the drawer, requiring the drawee to pay a sum certain in money on demand or at a fixed or determinable future time (Bills of Exchange Act 1882, section 3)
DrawerThe exporter, or the beneficiary of a letter of credit, who signs the draft
DraweeThe party ordered to pay: the importer in a collection, a bank in a letter of credit
SightPayable on demand, at sight or on presentation, or when no time for payment is stated
UsancePayable at a fixed period after date or sight, for example 60 days after the bill of lading date
Words vs figuresIf they differ, the sum in words is the amount payable (Bills of Exchange Act 1882, section 9)
AcceptanceWritten on the bill and signed by the drawee; the drawee's signature alone is enough
Letters of creditUnder UCP 600, Article 6(c), a credit must not be issued available by a draft drawn on the applicant

What to write on a draft

Drafts in collections: D/P and D/A

In a documentary collection under URC 522 the draft is drawn on the importer. With D/P at sight the importer pays the draft to receive the documents; with D/A the importer accepts a usance draft by signing it and pays at maturity. URC 522 says that collections should not combine a draft payable at a future date with instructions to release documents against payment.

Drafts under letters of credit

Under UCP 600 the draft is drawn by the beneficiary, and a credit must not be issued available by a draft drawn on the applicant; the drawee is the issuing bank or a nominated bank. If the credit is available by acceptance, honour means accepting the draft and paying at maturity. The tenor must match the credit terms, the amount must be the amount being drawn, and if the amounts in words and figures differ, the amount in words is examined. Any correction needs the beneficiary's signature or initials.

Step by step

  1. Check the tenor and drawee required by the sales contract, the collection instruction or the letter of credit.
  2. Write the amount in figures and in words in the same currency, and check that both say the same.
  3. For a usance draft, state the period and the starting event, such as the bill of lading date.
  4. Name the correct drawee: the importer in a collection, the bank in a letter of credit, never the applicant.
  5. Sign as drawer, endorse if required, and initial any correction.
  6. Present the draft with the other documents within the required period.

Documents you usually need

Common problems and how to avoid them

The amount in words does not match the amount in figures.

What to do: The amount in words prevails, and under a letter of credit the bank examines the amount in words; correct the draft and initial the correction.

The draft under a letter of credit is drawn on the applicant.

What to do: UCP 600 does not allow a credit to be available by a draft drawn on the applicant; draw it on the bank named in the credit.

The tenor on the draft differs from the credit.

What to do: Use the tenor stated in the credit, word for word, including the starting date such as the bill of lading date.

A usance draft is sent with D/P instructions.

What to do: URC 522 says not to combine them; if it happens, documents are released only against payment, so agree D/A or a sight draft instead.

Sources

  1. Bills of Exchange Act 1882, Part II: form and interpretation legislation.gov.uk
  2. Uniform Customs and Practice for Documentary Credits (UCP 600) ICC
  3. Uniform Rules for Collections, 1995 Revision (ICC Publication No. 522) ICC
  4. Letter of credit: how to prepare a draft (February 2023) Trade Finance Global

Rules change often. This note is practical guidance based on the sources above, not legal advice. Confirm current requirements with the authority, your importer or a licensed customs broker before you ship.

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Trade notes

Documentary collection: D/P vs D/A under URC 522, steps and risksHow a documentary collection works under ICC URC 522: the five parties, D/P vs D/A, what banks check, the collection instruction, and what happens…Letter of Credit Meaning and How It Works: Step-by-Step Guide for ExportersHow an L/C works for exporters: the parties, proforma to issued credit, checks and amendments, shipment and presentation deadlines, examination…Letter of Credit Discrepancies: Why Banks Refuse DocumentsThe most common reasons banks reject documents under a letter of credit, based on UCP 600 and ISBP 821, plus a pre-presentation checklist for…

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Common questions

What is the difference between a bill of exchange and a draft?

In trade finance they mean the same thing: a written order from the drawer to the drawee to pay a sum at sight or at a future date.

What does 'at sight' mean on a draft?

It is payable on demand or on presentation; a draft with no time for payment stated is also payable on demand.

What if the amount in words and figures differ?

Under the UK Bills of Exchange Act 1882 the sum in words is payable, and banks examining a draft under a letter of credit look at the amount in words.

Who is the drawee under a letter of credit?

A bank: the issuing bank or a nominated bank. UCP 600 says a credit must not be available by a draft drawn on the applicant.

How does the buyer accept a draft under D/A?

By writing the acceptance on the draft and signing it; the drawee's signature alone is enough under the UK act.

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