{"id":12609,"date":"2022-08-22T08:00:24","date_gmt":"2022-08-22T08:00:24","guid":{"rendered":"https:\/\/www.kredx.com\/blog\/?p=12609"},"modified":"2023-10-26T04:36:42","modified_gmt":"2023-10-26T04:36:42","slug":"what-exporters-need-to-know-about-post-shipment-finance","status":"publish","type":"post","link":"https:\/\/www.kredx.com\/blog\/what-exporters-need-to-know-about-post-shipment-finance\/","title":{"rendered":"What Exporters Need to Know About Post-Shipment Finance"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"12609\" class=\"elementor elementor-12609\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-80baa19 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"80baa19\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-7e82a3d\" data-id=\"7e82a3d\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-c821c86 elementor-widget elementor-widget-text-editor\" data-id=\"c821c86\" data-element_type=\"widget\" data-settings=\"{&quot;ekit_we_effect_on&quot;:&quot;none&quot;}\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">In global trading, an exporter needs to wait a significant amount before receiving payments for items shipped to an overseas importer. This can restrain their cash flow, which can seriously jeopardise the optimal functioning of the company. In such a situation, businesses have the scope to opt for <\/span>post-shipment finance for exporters<span style=\"font-weight: 400;\">.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">In export financing, financial lenders sanction funds to the creditworthy exporters against Letters of Credit or non-LC bills like a Document against Acceptance or a Document against Payment. Consequently, exporters can rest assured as they have a reliable solution to their liquidity problem.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">With supply-chain-based <a href=\"https:\/\/www.kredx.com\/investment\/invoice-discounting\/short-term-investment\" target=\"_blank\" rel=\"noopener\">short-term financing<\/a> solutions enjoying growing popularity in recent years, post-shipment credit has become a staple of the business sector. Notably, leading FinTech services such as KredX are now providing <\/span><a href=\"https:\/\/www.kredx.com\/post-shipment-finance\" target=\"_blank\" rel=\"noopener\">post-shipment finance<\/a>\u00a0<span style=\"font-weight: 400;\">to exporters.<\/span><\/p><h2><b>How Does Post Shipment Credit Function?<\/b><\/h2><p><span style=\"font-weight: 400;\">As mentioned above, the lengthy-time period between shipping goods and receiving the remittance can be counterproductive for exporters. In particular, a lack of <a href=\"https:\/\/www.kredx.com\/supply-chain-finance\/working-capital\/what-is-working-capital\" target=\"_blank\" rel=\"noopener\">working capital<\/a> can hinder their growth and expansion plans. Companies need to have a stable discretionary income to invest in raw materials, acquire new tools or pay wages.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Lending institutions provide <\/span>post-shipment finance for exporters <span style=\"font-weight: 400;\">as a loan against the products they have already shipped. In India, this credit is provided to the business owners from the date of extending credit after shipment of goods to the realisation date of export proceeds. As per the RBI guidelines, this stipulated period of export proceeds realisation is <\/span><span style=\"font-weight: 400;\">15<\/span><span style=\"font-weight: 400;\"> months from the export date.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">In this transaction model, financial institutions sanction funds against export sales receivables. To avail the financing, the exporters must present evidence of the overseas shipment. As the financiers have control over the commercial documents associated with the goods shipped, this loan is self-liquidating in most cases.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Notably, <\/span>post-shipment finance for exporters <span style=\"font-weight: 400;\">is provided for three different types of exports:<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Physical Export: <\/b><span style=\"font-weight: 400;\">In this instance, the lender provides credit to the actual exporter, who is mentioned by name in the trade documents.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Capital Goods and Project Export: <\/b><span style=\"font-weight: 400;\">Under this scheme, funds are sanctioned in the name of the foreign importer. Although, the money gets disbursed directly to the domestic exporter.\u00a0<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Deemed Export: <\/b><span style=\"font-weight: 400;\">The finance is offered to the supplier of goods and services, which are sent to the designated agencies.\u00a0<\/span><\/li><\/ul><h2><b>Importance of Post Shipment Finance<\/b><\/h2><p><span style=\"font-weight: 400;\">Even other than offering an immediate and prompt solution to the budget-crunch issue of the exporters, <\/span>post-shipment finance for exporters <span style=\"font-weight: 400;\">is immensely important for other aspects of the business too.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">For instance, this model offers a time-efficient option to the exporters regarding converting their accounts receivables to cash. As a result, these exporters get more flexibility in extending grace periods to their overseas buyers. Consequently, these businesses build towards sustainable growth thanks to their improved Customer Lifetime Value.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Moreover, businesses do not need to risk losing their assets as collateral is not required for this loan. Small-scale businesses in India often struggle to access traditional credit, as the lack of collateral makes lenders deem them high-risk borrowers. Export financing provides the crucial financial assistance needed by exporters ensuring the acquisition of funds without indemnity.\u00a0<\/span><\/p><h2><b>Types Of Post Shipment Credit\u00a0<\/b><\/h2><p><span style=\"font-weight: 400;\">There is a wide array of options available for realising the <\/span>post-shipment finance for exporters<span style=\"font-weight: 400;\">, such as:<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Advance against a bill for collection<\/span><\/i><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Finance against export on a consignment basis<\/span><\/i><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Advance against claims of duty drawback<\/span><\/i><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Finance against undrawn balances<\/span><\/i><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Purchased export bills<\/span><\/i><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Discounted export bills<\/span><\/i><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Negotiated export bills<\/span><\/i><\/li><\/ul><h2><b>Who Are Eligible for Post Shipment Finance for Exporters?<\/b><\/h2><p><span style=\"font-weight: 400;\">All kinds of exporters, including market and manufacturing exporters, export and trading houses and manufacturers who supply merchant exporters, export houses and trading houses, can avail this credit facility.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Both individuals and companies are eligible to acquire this funding. In other words, if any legal entity is associated with the export of goods, that entity is permitted to get <\/span>post-shipment finance for exporters<span style=\"font-weight: 400;\">.\u00a0<\/span><\/p><h2><b>Which Documents Are Required to Get Post Shipment Credit?<\/b><\/h2><p><span style=\"font-weight: 400;\">As evidence of the goods being shipped, one must submit <a href=\"https:\/\/www.dealdrop.com\/research\/stores-with-free-shipping\" target=\"_blank\" rel=\"noopener\">shipping<\/a> documents like:<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Original copy of the Letter of Credit<\/span><\/i><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Import Export Code [IEC] certificate<\/span><\/i><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Bill of lading<\/span><\/i><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Airway bill<\/span><\/i><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Commercial invoice<\/span><\/i><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Packing list<\/span><\/i><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Certificate of origin<\/span><\/i><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Inspection certificate<\/span><\/i><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Insurance certificate<\/span><\/i><\/li><\/ul><p><span style=\"font-weight: 400;\">It is important to note that other than these <a href=\"https:\/\/malaysia.docshipper.com\/logistics\/international-shipping-freight-documents-you-need\/\" target=\"_blank\" rel=\"noopener\">shipping documents<\/a>, a lender might ask for additional paperwork on a case-to-case basis.\u00a0<\/span><\/p><h2><b>Who Provides Post Shipment Finance for Exporters?<\/b><\/h2><p><span style=\"font-weight: 400;\">There are three major sources from which exporters can get a post-shipment funding:<\/span><\/p><ul><li><b>Banks:<\/b><span style=\"font-weight: 400;\"> Different kinds of banks, such as the nationalised, cooperative, foreign, rural or private ones, are legally capable of extending this service to the exporters.\u00a0<\/span><\/li><li><b>Export-Import (Exim) Bank of India: <\/b><span style=\"font-weight: 400;\">The Exim Bank is a government-owned financial institution which can sanction funds against shipped goods to business owners.\u00a0<\/span><\/li><li><b>NBFCs: <\/b><span style=\"font-weight: 400;\">Non-Banking financial corporations have also revitalised export-specific financial services by offering <a href=\"https:\/\/www.kredx.com\/working-capital\/invoice-discounting\" target=\"_blank\" rel=\"noopener\">invoice discounting<\/a>, working capital loans, etc.\u00a0<\/span><\/li><\/ul><h2><b>Bottom Line<\/b><\/h2><p><span style=\"font-weight: 400;\"><a href=\"https:\/\/www.kredx.com\/supply-chain-finance\/export-financing\/export-financing\" target=\"_blank\" rel=\"noopener\">Export financing<\/a> in India continues to reshape the import-and-export market of this country. Notably, business owners now do not have to solely depend on traditional lenders like banks to avail <\/span>post-shipment finance for exporters<b>. <\/b><span style=\"font-weight: 400;\">With leading fintech services like KredX sanctioning funds against already shipped goods, exporters do not have to worry about cash tangled up in accounts receivables.\u00a0\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>In global trading, an exporter needs to wait a significant amount before receiving payments for items shipped to an overseas importer. This can restrain their cash flow, which can seriously jeopardise the optimal functioning of the company. In such a situation, businesses have the scope to opt for post-shipment finance for exporters.\u00a0 In export financing, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":12610,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1252],"tags":[954,451],"class_list":["post-12609","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global-trade","tag-export-financing","tag-global-trade"],"_links":{"self":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/12609","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/comments?post=12609"}],"version-history":[{"count":25,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/12609\/revisions"}],"predecessor-version":[{"id":16555,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/12609\/revisions\/16555"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/media\/12610"}],"wp:attachment":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/media?parent=12609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/categories?post=12609"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/tags?post=12609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}