Even if the word itself is unfamiliar, chances are that anyone involved in business has heard of the instrumental figure central to many types of financial transactions: the drawer. As a legal entity, the drawer is the individual or entity who orders to have money drawn from a financial institution. The drawer originates a payment order and instructs the beneficiary to be paid through the payee.
Drawer Responsibilities
The drawer is responsible for ensuring that payments made by them are valid, as well as any associated charges that may be incurred. This individual or entity also bears the burden of any and all damages and losses if the payment is not valid. As the originator of the payment, the drawer has the liability to make sure that all the details are correct before sending a payment or any money.
Drawer in Action
For example, if a company wants to pay its vendors for services rendered, it would be the company or legal entity responsible for the payment – and thus the drawer. The same is true for settling debts or depositing money into a bank account. In all of these scenarios, whoever initiated the payment would be considered the drawer, carrying the same legal responsibilities.
Bottom Line for Drawer
The term drawer is essential for businesses due to the legal implications that may arise when a payment is not handled correctly. As a legal entity, the drawer should always make sure that payments are valid and are not in breach of any regulations through the means of properly documenting all transaction details. All responsible businesses should be aware of the drawers role and their own obligations when it comes to payments.