how a drawee works
the drawee performs the function of an intermediary for a financial transaction its purpose is to redirect funds from the payer or drawer account to to the payee often the drawee is a financial institution that holds the payer funds within a deposit account under its management consumer banks regularly perform this function removing funds from a depositor s account to pay the obligation represented by a check check cashing services also perform the duties of a drawee but normally require a small fee to complete the transaction additionally money order and wire transfer companies that exist outside of the traditional banking format also qualify the money order functions as the bill of exchange that when presented by the payee is honored by the company that received the funds from the payer the drawer is the individual or organization that writes a check or creates a bill of exchange that instructs the drawee to distribute funds to the payee drawees in other industriesthere are instances outside of financial institutions where a party may be considered a drawee if only in an informal sense for example when a customer uses a manufacturer s coupon as part of a sales transaction the store accepting the coupon can be seen as the drawee in relation to the customer it is the entity facilitating the transaction the customer presents a document created by a company that is the drawer or payer behind the coupon the store honoring the coupon is the drawee the customer is the payee or person who receives the coupon s benefit most of these types of transactions do not require that actual money be handed to the customer however because money is funded as a discount on the total cost a transaction may result in an actual payment depending on various regulations governing such activity once the coupon is turned in to the retailer the retailer can then claim the funds supported by the company issuing the coupon again the drawer this leads to no actual out of pocket loss on the part of the drawee just as for financial institutions cashing a check because the funds are ultimately removed from the drawer s account 