Bank drafts and commercial drafts are common forms of bills, which have many differences in business scenarios and functions. The difference between a bank draft and a commercial draft will be introduced below.
1. Definitions
1.Bank draft:
A bank draft is a bill issued by a bank with the bank as the payer. It is a large amount of money settlement instrument that is paid or transferred by a bank on behalf of a customer. Bank drafts are usually used for large-amount capital transactions such as settlement between enterprises, purchase of real estate, etc.
2.Commercial Draft:
A commercial draft is a bill issued by an enterprise, institution or individual with which it is the payer. Commercial bills are usually traded directly with the payee by enterprises, institutions or individuals for small amount settlement, such as daily retail, wholesale and other transactions.
2. Ticket issuer
1.Bank draft:
Bank drafts can only be issued by banks and cannot be issued by ordinary commercial institutions. Only institutions with banking qualifications can issue bank drafts.
2.Commercial Draft:
Commercial bills can be issued by any unit or individual, including enterprises, institutions and individuals. Any legal subject has the right to issue commercial bills.
3. Payer
1.Bank draft:
The payer of a bank draft is the bank itself, so when using a bank draft, the holder needs to open an account with the bank and deposit sufficient funds. The bank will pay the payee according to the holder's instructions.
2.Commercial Draft:
The payer of a commercial draft is the drawer (business, institution or individual). The payment of commercial bills is the responsibility of the drawer, and can be settled by bank transfer or cash payment.
4. Payment Methods
1.Bank draft:
Bank drafts are usually paid by bank transfer. The holder can endorse the bank draft to the payee, and the payee will then redeem or discount it to the bank.
2.Commercial Draft:
Commercial drafts can be settled by bank transfer or cash payment. A commercial bill of exchange can also be endorsed and transferred, allowing the holder to transfer the rights of the bill of exchange to another person or business.
5. Scope of use
1.Bank draft:
Bank drafts are usually used for large amounts of money settlement. For example, the settlement between enterprises, the purchase of real estate and other transactions that require large payments.
2.Commercial Draft:
Commercial bills are usually used in the scenario of small amount settlement. For example, daily retail, wholesale and other transactions involve relatively small transactions.
6. Endorsement of bills
1.Bank draft:
Bank drafts are not allowed to be endorsed and can only be paid directly to the payee by the payer's bank on the due date. This is to ensure the safety and reliability of payments.
2.Commercial Draft:
Commercial bills of exchange can be endorsed and transferred, that is, the drawer transfers the rights of the bill of exchange to other individuals or enterprises. Endorsement transfer can easily realize the circulation and payment of bills.
7. Fees
1.Bank draft:
The handling fee for bank drafts is usually higher because banks need to provide services such as escrow and transfer of funds. The handling fee depends on the bank's policy and the amount of the note.
2.Commercial Draft:
The handling fee for commercial bills of exchange is comparatively low because there is no bank to act as an intermediary. The specific handling fee is determined by negotiation between the ticket issuer and the payee.
Summary:
There are several differences between a bank draft and a business draft. The bank draft is issued by the bank, and the payer is the bank itself, which is used for the settlement of large amounts of funds;Commercial bills can be issued by any unit or individual, and the payer is the drawer, usually used for small amount settlement.