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Bank Draft and Transmittal Letter

Download and print this PDF of a Bank Draft and Transmittal Letter form to help make sure you get paid for your exports.

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What is a Bank Draft and Transmittal Letter?

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A bank draft is an important part of the international sales process for transferring control of the exported goods from the seller in exchange for funds from the buyer. It is often called a documentary collection because the seller attaches documents to a draft and a cover letter.

Usually the seller’s bank will send the bank draft and related documents via the freight forwarder to the buyer’s bank or a bank with which it has a relationship in the buyer’s country. When the buyer authorizes payment for the goods, the buyer’s bank will release the documents to the buyer and transfer the funds to the seller’s bank.

The bank draft may or may not include a transmittal letter, which includes details of the draft transaction including the types of additional documents that are included and payment instructions.

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Bank Draft FAQs

  • What is a bank draft in international trade?

    In an international sale, typically the seller’s bank will send the bank draft and related documents via the freight forwarder to the buyer’s bank or a bank with which it has a relationship in the buyer’s country. When the buyer authorizes payment for the goods, the buyer’s bank releases the documents to the buyer and transfers the funds to the seller’s bank.

  • How long does it take for a bank draft to clear?

    The time it takes for a bank draft to clear can vary depending on the banks involved, the countries of the payer and payee, and the specific banking processes. It can take anywhere from a few days to a couple of weeks.

  • Why use a bank draft in international trade?

    Bank drafts are commonly used in international trade because they provide a level of assurance to the seller that the payment is secure. They reduce the risk of fraud and non-payment.

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