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.
