How to calculate Due Date of a Term Bill /Usance Bill

The term of a bill is the payment term, and the due date is the date on which the bill is payable.

The payment term is the period for which the bill is payable. For example, a bill may be due 30 days, 45 days, or 60 days after the invoice date, after sight or acceptance.

Terms and Due Date of a Bill

Calculation of due date: The due date is the date on which the buyer is required to pay the bill. The due date is a crucial term in finance because it determines the repayment timeline and impacts interest rates.

1. Due date for Bill at Sight: The due date in this case is the date on which a bill is presented for payment. A bill after sight, also known as a bill at sight or bill on demand, is a bill of exchange where no payment time is specified. This means that there is no grace period, and the bill is due immediately upon presentation.
2. Due date of Bill after Date: Due date in this case, the date of drawing plus the terms of the bill. For example, if the bill is drawn on December 1, 2024, and its maturity is 30 days after the date then its due date would be December 1, 2024 + 30 days =  December 31, 2024
3. The due date for the Bill after acceptance: The due date is, in this case, the date of acceptance plus the terms of the bill. For example, if the bill is drawn on November 27, 2024, and it is accepted on December 5, 2024, and the maturity of the bill is 1 month after sight, then the due date would be December 5, 2024 + 1 month = January 5, 2025.

Calculation of Maturity date: Section 22 of the Negotiable Instrument Act 1881 provides that “every promissory note, bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the date on which is expressed to be payable”. Thus, the maturity date is calculated by adding the bill’s term to the relevant date, plus a grace period of three days. The relevant date can be the date of the bill, the date of acceptance, or the date of the transaction.

For example, the maturity date for illustration 2 above is December 1, 2024 + 30 days = January 3, 2025. The maturity date for illustration 3 above is December 5, 2024 + 1 month + 3 days = January 8, 2025.

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