Pre-Shipment Finance is issued by a financial institution when the seller want the payment of the goods before shipment. The main objectives behind preshipment finance or pre export finance are to enable exporter to:
- Procure raw materials.
- Carry out manufacturing process.
- Provide a secure warehouse for goods and raw materials.
- Process and pack the goods.
- Ship the goods to the buyers.
- Meet other financial cost of the business.
Types of Pre Shipment Finance:
- Packing Credit
- Advance against Cheques/Draft etc. representing Advance Payments.
Post-Shipment Finance is meant to finance export sales receivable after the date of shipment of goods to the date of realization of exports proceeds. In cases of deemed exports, it is extended to finance receivable against supplies made to designated agencies.
Types of Post Shipment Finance:
- Export Bills negotiated.
- Advance against export bills sent on collection basis.
- Advance against export on consignment basis.
- Advance against undrawn balance on exports.
- Advance against claims of Duty Drawback.