What is a ‘Drawee’
The drawee is a legal and banking term used to describe the party that was sent by the depositor to pay certain amount of money to the person presenting the check or draft. A typical example-if you Deposit the check. A Bank that will cash out your check is a drawee, your employer who writes the check in the box, and you are the recipient.
Breaking Down The ‘Drawee’
By the drawee often serves as an intermediary for the financial transaction. Its purpose is to redirect funds from the payer or maker, bills to represent the funds in his account. Often, the position of the drawee is the financial institution which holds funds of the payer in the framework of the Deposit account under his control.
Examples of payments in the financial market
Consumer banks to regularly perform this function, removing funds from investor accounts to pay obligations listed on the check. Check cashing of the check to perform the duties of the payer, but often require a small fee to complete the transaction. In addition, money transfer and wire transfer, which exist outside the traditional banking Format also has the right to. The function of money as a promissory note that in the case of providing the recipient is taken into account by company that receives funds from the payer.
Drawees in other sectors
There are cases, outside financial institutions, where the participant can be considered as drawee, if only in an informal sense. For example, when a customer uses the coupon number within the transaction of purchase and sale, the store to accept the coupon can be considered as a payer in relation to the client. The client has presented a document created in the company, functioning as the drawer or payer of the debt, what gives him the right to a certain amount of money in exchange for the purchase of the product causing the customer to perform the role of the recipient.
Although most of these operations do not require real money to be transferred to the customer, because the money is funded as a discount of the total amount, this can lead to their actual payment depending on various rules governing the activity.
After getting the coupon in the store, the seller can claim the funds, supported by the company that issued the voucher. This leads to actual losses on the side of the payer, as in the case of financial institutions cashing the check, because the funds ultimately removed from the accounting records maintained deposits from the issuing company.