Post Shipment Finance is financial assistance provided to exporters after goods have been shipped, to bridge the gap until payment is received from the buyer.
How It Works:
- Goods are shipped to the buyer.
- Export documents are submitted to the lender.
- Funds are provided against these documents.
- Payment is received from the buyer later.
- The loan is settled using the proceeds.
Benefits:
- Enhances liquidity by unlocking funds tied up in receivables
- Mitigates working capital constraints during extended payment cycles
- Supports continuity of export operations without cash flow disruptions
- Reduces dependence on internal accruals for financing
Example:
An exporter receives funds after shipment while waiting for the buyer to pay after 60 days.