Methods of Financing Exporters
Let’s learn more about Methods of Financing Exporters. Following are the methods used in Financing exports:
Pre-shipment Finance
Pre-shipment Finance: Pre-shipment is a loan/advance granted to the exporter for financing the purchase, processing, manufacturing or packing of goods prior to shipment. Pre-shipment is also known as packing credit. The packing credit is granted on the basis of letter of credit or a confirmed and irrevocable order for the export of goods/services from india or any other evidence of an order for export from India.
Post-shipment Finance
Finance against receivables, in the form of shipping documents, is post shipment finance. Exporter should have an IEC number and each shipment should be accompanied by prescribed declaration (GR/SDF/PP/SOFTEX) form in which the value of the export will be declared and duly certified by the customs authority.
Shipping documents along with relative GR form must be submitted to the authorized dealer within 21 days from the date of shipment.
Huge quantities of goods are sold in the form of exports in the International Market. These exports require a certain amount of financial assistance for the execution of the order. The finance depends upon the types of goods to be executed and also based on the overseas buyers. The amount can vary based on the requirement from short term to long term finance.
This module covers the following topics:
