The term export finance refers to credit facilities and techniques of payments at the pre-shipment and post-shipment stages. Export-Import Bank (EXIM Bank) extends finance to exporters and to overseas joint ventures and construction projects abroad. It refers to financial support extended by banks and other financial institutions to businesses for the shipping of products outside a country or region. It is essential to fully comprehend the risks and government regulations before selling overseas.
Export finance offers a way for businesses to release working capital, especially from overseas transactions, that might otherwise remain tied up in invoices for long periods of time.
The financial requirements of exporters can be of two types:
(a) Pre-shipment Finance: Pre-shipment finance refers to the credit extended to exporters prior to the shipment of goods for the execution of an export order.
(b) Post-shipment Finance: Post-shipment finance refers to the credit comprehensive to exporters after the shipment of goods for a working capital requirement.