Export financing
Export financing provides financial support to businesses that sell goods to foreign buyers. It ensures that exporters have the necessary funds to operate while waiting for payment from overseas customers.
How it works in detail:
• Step 1
The exporter ships goods or services to a foreign customer. In most cases, there is a delay between shipping the goods and receiving payment, which could take weeks or even months.
• Step 2
To bridge this gap, the exporter approaches a financial institution and requests export financing. The financial institution evaluates the expected payment and provides a loan or advance.
• Step 3
The financial institution funds the exporter against the expected payment from the foreign buyer.
• Step 4
Once the foreign buyer pays the invoice, the exporter settles the loan with the financial institution.
This type of financing helps exporters maintain liquidity, even when payment from foreign buyers is delayed.