Why Export Finance Is Different
International trade adds layers of complexity that domestic business doesn’t have: currency risk, longer payment cycles, buyer creditworthiness in another country, and shipping timelines. Export finance products are built specifically to manage these.
Pre-Shipment Finance (Packing Credit)
Packing credit is working capital provided before goods are shipped, covering the cost of procuring raw materials, manufacturing, and packing the export order. It’s typically extended against a confirmed export order or LC from the overseas buyer.
This is critical for exporters who don’t have the cash reserves to fulfill a large order upfront and need financing to bridge the gap between winning the order and getting paid.
Post-Shipment Finance
Once goods are shipped, post-shipment finance covers the period between shipment and actual payment realization from the overseas buyer. This can be through negotiation of export bills, advances against bills sent for collection, or advances against duty drawback.
Bill Discounting for Exporters
If you’ve raised an invoice against an export shipment and don’t want to wait 60-90 days for the buyer to pay, bill discounting lets you get a large portion of that invoice value upfront from the bank, which then collects payment from the buyer directly.
Letter of Credit (LC) and Bank Guarantee (BG)
An LC from the buyer’s bank assures you that payment will be made once you meet the shipping and documentation terms — this is one of the safest ways to get paid in international trade. A BG, on the other hand, is often required by the buyer as assurance that you’ll perform according to contract terms.
Putting It Together
Most exporters end up using a combination of these instruments across a single deal cycle: packing credit to manufacture, an LC to assure payment, and post-shipment finance or bill discounting to get paid faster. The right combination depends on your buyer relationship, deal size, and cash flow needs.
We work with exporters across Delhi NCR to structure trade finance that matches their actual deal cycle rather than forcing a generic product.