Post-Shipment Financing
WHY EXPORTERS SHOULD USE IT
It provides short term
financing and is essentially
a discounting of the
Exporter's receivables,
covered under EXIMBANK's
Export Credit Insurance.
Therefore it bridges the gap
for manufacturers between
the costs expended on
production and the receipts
from export sales.
EXIMBANK's Post-Shipment
Financing Facility can be
accessed directly or through
our joint financing
arrangement with the various
commercial banks. By using
this facility the exporter
receives 85% to 100% of the
value of the export invoice,
upon shipment. Our Export
Credit Insurance gives the
commercial banks the
confidence to join with us
in supporting these export
transactions, thereby
assisting Exporters to
become net earners of
foreign exchange.
The principal benefits to
the Exporter are as follows:
-
Exporter’s working capital
cycle is shortened.
Allows for increased
production levels.
By discounting in US
Dollars, there is immediate
savings in interest costs
from the more costly local
borrowings. In this way, the
Exporter’s financial
capability is enhanced.
Cost effective risk
protection against buyer
defaults.
The Exporter is granted the
option to provide greater
credit terms to the foreign
buyer perhaps even more than
other international
competitors can. This
creates a clear competitive
advantage in today's market
place.
The challenges of the
current economic environment
and today's globalized
market place require
Exporters to optimize their
use of the various
facilities available in
order to achieve that very
important competitive edge.
HOW DOES POST-SHIPMENT
FINANCING WORK?
Exporters are able to
convert a credit sale into a
cash sale thereby freeing up
their capital for further
exports.
Amount Discounted 85% - 100%
of invoice value.
(Negotiable)
Export Credit Insurance -
Calculated as a percentage
of the invoice value and is
based on the buyer's rating
and the terms of trade.
(Refer to schedule of
premium rates.)
Discount Interest -
Calculated on the amount
discounted from the date of
the discount transaction to
the date payment received
from the buyer.
Grace Period - A period
representing 15 days after
the invoice maturity date
before penalty interest
becomes applicable.
*** Note That All Interest
Cost is Calculated on the
Amount Advanced/Discounted
(95%)
| SCENARIO 1:
PAYMENT RECEIVED ON
MATURITY DATE |
|
| SCENARIO 2:
PAYMENT RECEIVED 15
DAYS AFTER MATURITY
DATE |
|
Exports
International
Limited
Invoice #01 -
US$30,000.00
Invoice Amount:
US$30,000.00
Amount Discounted -
US$28,500.00
Discount Interest @
9.5% for 45 days
(01/01/02 -
15/02/02) US$ 338.43
Amt. Dis. + Interest
Cost payable:
US$28,838.43
Amount to be
Refunded upon
receipt of Payment:
US$ 1,161.57 |
Exports
International
Limited
Invoice #01 -
US$30,000.00
Invoice Amount:
US$30,000.00
Amount Discounted -
US$28,500.00
Discount Interest @
9.5% for 45 days:
(01/01/02 -
15/02/02) US$ 338.43
Discount Interest @
9.5% for 15 days:
US$ 112.81
Grace Period of (15
days) (16/02/02 -
03/03/02)
Amt Dis. + Interest
Cost payable + Grace
Period US$28,951.24
Amount to be
Refunded upon
receipt of Payment
US$ 1,048.76 |
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