Post-shipment Export Finance

Post-shipment export finance can include a lot of different forms:

• Bill negotiation under LC can be availed of by an exporter after submitting the required documents to the bank. The bank, on its part, sanctions an amount up to the maximum of the L/C amount, after liquidating pre-shipment finance, if availed of by the exporter.
• Bill discounting can be used by the exporter even when the bill is not covered under L/C. 
• Advance can also be availed of against bills sent for collection; this is a regular practice in certain lines of trade.
• Advance against goods sent on a consignment basis can be availed after the sale of goods. The overseas branch of the exporter’s bank can adjust this advance against the proceeds once they are realized.
• Advance against duty drawback can be used by exporters in case of drawbacks received via government incentives. These benefits are provided by the government after the sale of goods and receipt of the sale proceeds. These advances can be offered by banks as pre-shipment finance as well.
• Advance against undrawn balance is applicable in case of businesses where the exporter doesn’t bill the buyer for the entire sale value. A portion of the invoice value is not drawn in anticipation of differences and adjustments in the final value.
• Advance against retention money is applicable in the case of capital goods or construction projects. A portion of the project value is retained by the buyer until the contract is fulfilled, and banks provide an advance against this retained portion. Similar to this is advance against deferred payment.