Acceptance credit is a type of short-term financing where a bank guarantees payment of a bill of exchange on behalf of its customer.

In this arrangement:

The seller draws a bill on the buyer.

The buyer’s bank accepts the bill (promises to pay on due date).

The seller can then discount the bill and get money immediately.

The bank charges a fee for providing this guarantee.

In simple terms, acceptance credit is a bank-supported credit facility where the bank promises to pay later, helping businesses trade smoothly.