EXPORT FINANCE:

Working capital may be defined as funds required carrying the required level of Current assets to enable the industry to carry on its operations at the expected levels uninterruptedly. Financing support to assist exporters in pursuing overseas markets

Classification: Export credit can be broadly classified into 1. Pre-shipment finance and 2. Post shipment finance. Pre-shipment finance refers to finance extended to purchase, processing or packing of goods meant for exports. Pre-shipment finance is generally provided for the following purposes:
Procurement/purchase of raw material Production Processing Packing Warehousing Transportation

Once the exporter has shipped the goods, there will always be a time gap between the date of shipment and receipt of payment. Post-shipment credit refers to the facilities extended by the banks to the exporter during this period to enable him to tide over his financial needs. Post-shipment finance can be granted up to 100% of the invoice value although the normal practice is to give 90%. The following options are available to the exporter for post-shipment credit: Purchase of Export Documents drawn Under Export Order Advances against Bills sent for Collection Advance against Under drawn Balance Advances against Claims of Duty Drawback Advance against goods sent on Consignment Basis Negotiation of Export Documents under L/C

Import Finance:
The delays and complications associated with trading overseas can be a great burden on an importer's cash flow. Import finance specializes in overcoming these challenges, leaving working capital free to invest into growing the business.

1 | P a g e Rameez Ramzan Ali

There are traditionally four distinct methods of paying for overseas goods and raw materials: advance payments, letters of credit, documentary collection and open account trading, with each one carrying its own cash flow benefits.

2 | P a g e Rameez Ramzan Ali