Export finance

Export finance

Export  finance helps exporters or sellers in getting finance for various trade related activities. It is for assisting the traders who are willing to sell goods to international buyers. It results in increased sales of the customers, and availing more profit from those sales. Export finance helps exporters to get finance for the pre shipment and post shipment activities so that all the tasks can be performed smoothly even before getting paid from the importer.

The exporter may require short term, medium term or long-term finance depending upon the type of commodities being exported. There exist different types of trade finance companies and trade finance institutions depending on the business needs and the nature of the export transaction. Export finance basically provides exporter financial support from manufacturing, production of goods to delivery of goods to the buyer. These facilities are provided using factoring and export factoring to import export business by trade finance providers.

It can be considered as a loan for exporter for accomplishing various tasks involved in the export of goods. Apart from this, there exist various methods of payment in international trade such as letter of credit, cash in advance, documentary collections and open account.

Why export finance?

●      In order to set up a new business

●      For expanding the existing business

●      For working capital

When you need Export Finance?

An exporter might need export finance in various stages of the business cycle, including:

●        Pre-Shipment

●        Post Shipment

●        Finance against the collection of invoices and at a number of stages of the working capital cycle

●        Finance for the case of suspension and removal of export subsidies and other benefits

Benefits of export finance

●        It allows you to handle your business transactions quickly and efficiently. 

●        It covers and helps you to deal with the risks present within the international trade which includes legal risks, political risks, marketing and financial risks.

●        It leads to more efficient allocation of resources and lower cost per unit

●        Helps to widen the range of choice of commodities

●        Helps the company to grow and increase trade

●        Cash flow can be managed easily

●        It is flexible and quite simple to use

Who Can Provide Export Finance?

There exist different banks as well as non-banking financial corporations along with foreign trade-specific lenders which offers financial assistance for the traders especially exporters.

●        The Export-Import (Exim) Bank of India provides numerous options of finance such as buyer’s credit, corporate banking products, lines of credit, project-based finance and much more.

●        Banks such as nationalized banks, private sector banks, foreign banks, regional rural banks, cooperative banks and others too. All of them provide financing options for international trade. The services provided by them includes pre-shipment or post-shipment finance, lines of credit, foreign currency loans, advances against bills etc. It is obvious that not all banks and each and every branch will offer you with export specific products. Thus, you need to be known to your bank’s offerings thoroughly so that you can move further.

●        Non-banking financial institutions also offers a number of export-specific financial services such as bill discounting, factoring, working capital loan, buyer loans, lines of credit, etc.