Trade Finance check0 / 1 answered · 0 correct
Check 1
Can an exporter sometimes finance production before shipment?
Pre-shipment Finance
Learn how working capital can be provided before goods are shipped.
Purpose
Pre-shipment finance can fund purchase of raw materials, production, packing or other costs before shipment.
Possible support
A firm order, export contract, documentary credit, borrowing-base assets or other collateral may support the facility, but bank requirements differ.
Risks
Production failure, buyer cancellation, commodity price changes, fraud, sanctions and inability to make a complying presentation can affect repayment.
Not automatic from LC issuance
Receiving an LC can improve the financing case but does not force the beneficiary’s bank to lend before shipment.
Remember thisAn LC can support working-capital finance, but it is not automatically a cash advance.
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