Definition§
The term “After Sight” refers to the wording used in a bill of exchange to indicate that the time for payment will commence from the date on which the drawee is presented with the bill for acceptance. In other words, once the drawee has “seen” the bill, the period specified for payment begins to run. This is in contrast to other terms like “after date” or “at sight,” which trigger the payment period from different points.
Examples§
Example 1: International Trade§
- A British exporter issues a bill of exchange to an American importer with terms “After Sight, 60 Days.” The importer receives the bill on June 1, 2023, and accepts it on that date. The payment will be due 60 days after the acceptance date, making the due date July 31, 2023.
Example 2: Domestic Business Transaction§
- A furniture manufacturer in California issues a bill of exchange to a retailer in New York with the terms “After Sight, 30 Days.” The retailer receives and accepts the bill on January 15, 2023. Payment is due 30 days from January 15, making the due date February 14, 2023.
Frequently Asked Questions (FAQs)§
1. What is the difference between “After Sight” and “At Sight”?§
- Answer: “After Sight” means the payment period begins when the drawee “sees” or accepts the bill, whereas “At Sight” means payment is due immediately when the drawee sees the bill.
2. Can the “After Sight” period be customized?§
- Answer: Yes, the period can be customized based on mutual agreement between the issuer and the drawee. Common periods include 30, 60, or 90 days.
3. What happens if the drawee refuses to accept the bill after sight?§
- Answer: If the drawee refuses to accept the bill, not only does the payment period not start, but the bill may also be considered dishonored, leading to potential legal consequences and affecting the drawee’s creditworthiness.
4. Is “After Sight” commonly used in modern transactions?§
- Answer: While it is less common than terms like “Net 30” or “Net 60,” “After Sight” is still used in international trade and financial transactions for specific circumstances where visibility and acceptance are crucial.
5. Does “After Sight” apply to other financial instruments?§
- Answer: Although primarily used in bills of exchange, similar terms can be found in letters of credit and promissory notes under negotiated terms.
Related Terms§
Bill of Exchange§
- A written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date.
Drawee§
- The entity (person or company) that is required to pay the amount specified in the bill of exchange when presented.
After Date§
- This term indicates that the payment period starts from the date of issue of the bill. It is a contrasting term to “After Sight.”
At Sight§
- This term means that payment is due immediately upon the presentation of the bill to the drawee.
Online References§
- Investopedia: Bill of Exchange
- Corporate Finance Institute: Bills of Exchange
- The Balance: Understanding Bills of Exchange
Suggested Books for Further Studies§
- “Principles of Corporate Finance” by Richard A. Brealey and Stewart C. Myers
- “International Financial Management” by Jeff Madura
- “Money, Banking, and Financial Markets” by Stephen G. Cecchetti and Kermit L. Schoenholtz
Accounting Basics: “After Sight” Fundamentals Quiz§
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