Introduction to Finance

Financing Through the Importer’s Bank 
In foreign trade, because of language 
barriers and the diffi
culty in obtaining credit information about companies in foreign coun-
tries, the use of the banker’s acceptance is common. The “
banker’s acceptance
,” which was 
fi rst described in Chapter 2, is a draft drawn on and accepted by a bank rather than the import-
ing fi rm. An example of a banker’s acceptance is shown in 
Figure 6.5
. The importer must, of 
course, make arrangements with the bank in advance. 
May 15, 20xx
Date
PAY TO THE ORDER OF
Value specified and Debt the same of the Account of
To: AnyBank
PO Box 123
Anytown, NY 12345
Dollars
Authorized Signature (Please endorse reverse side)
Dra
wn under confir
med L/C
N
o. E-23456, Dated Januar
y 30,
20xx, issued b
y An
yBank.
ANYBANK
City, County
Reference Number
$
New York, NY
Ninety Days Sight
Fifty Thousand and no/100 U.S.
ABC Company, Inc.
B. Frank, Pres.
531
50,000.
The transaction whic
h giv
es r
ise to this ins
tr
ument

is the im
por
tation of 

fr
om
ANYB
ANK
ANY
T
O
WN, N.Y
.
NO
.
NEW Y
ORK
ANYB
ANK
ANY
TO
WN
, NY
A
CCEPTED
ASSIS
T
ANT TREASURER
PER PR
OCURA
TION
FIGURE 6.5
 Banker’s 
Acceptance

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148
C H A PT E R 6 International Finance and Trade
The exporter, too, must know before shipment is made whether or not the bank in ques-
tion has agreed to accept the draft. This arrangement is facilitated by the use of a