Is your business in the export business and want to increase cash flow after delivery? Post-shipment export finance will be an effective solution to help businesses maintain continuous operations, even while waiting for customers to pay. Let's learn about this form of trade finance with [website name].
What is post-shipment export finance?
Post-shipment Export Financing is a short-term financing product provided by banks to exporting enterprises. This form will provide capital to exporting enterprises after they have delivered goods to buyers but have not yet collected payment. In other words, the bank will advance money to enterprises so that they can continue production and business while waiting for payment from the importing enterprise.
Post-shipment export financing will help exporting businesses:
- Have capital to maintain production and business activities, especially in the early stages of exporting or when exporting to new markets.
- Minimize payment risks for exporting businesses.
- Increase competitiveness for export enterprises in international markets.
Post-shipment export finance is a short-term trade finance product.
What are the characteristics of post-shipment export financing?
Post-shipment export finance (PFE) has the following main features:
- Timing of disbursement: Post-shipment export finance is disbursed after the business has delivered the goods and presented a valid set of export documents. This helps to minimize risks for the business because they only have to pay interest on the loan after they have collected the proceeds from the sale.
- Security method: In addition to common assets, security assets for SGH's export export loans often include the exported goods themselves or debt claims created from export contracts.
- Interest Rates: SGH TTXK interest rates may be higher than regular short-term lending rates due to the higher risk the bank takes on.
- Applicable objects:TTXK SGH Suitable for reputable export enterprises with high payment capacity andworking capital needs.
Post-shipment export finance typically has higher interest rates than short-term loans.
Advantages and disadvantages of post-shipment export financing
Similar to pre-shipment export financing, post-shipment export financing also has its own advantages and disadvantages that businesses need to know before choosing to use. Specifically as follows:
Advantages of post-shipment export financing
When businesses use post-shipment export financing, they will have the following outstanding advantages:
- Helps businesses increase their competitiveness in the international market: Businesses can be flexible in payment with customers, thus attracting more customers, especially potential customers in new markets.
- Helping businesses increase cash flow: Businesses are funded immediately after delivery, before the buyer pays for the goods, so they can use this money to reinvest in production and business or pay other expenses.
- Helps businesses minimize risks: Businesses only have to pay interest on loans after they have collected sales proceeds, thereby minimizing risks due to exchange rate fluctuations or risks due to customers not paying.
- Help businesses expand export markets: Businesses can export goods to new markets without having to worry about payment issues.
Post-shipment export finance can help businesses expand their markets
Disadvantages of post-shipment export finance
Besides the advantages, post-shipment export financing also has some disadvantages that businesses need to pay attention to, for example:
- Enterprises must pay higher interest rates than other forms of loans: The interest rate of SGH TTXK can be higher than the interest rate of normal short-term loans, especially in cases where customers do not provide additional collateral because the bank has to bear higher risks.
- The collateral for SGH TTXK loans can be debt collection authorities/receivables from export documents. However, some banks may require additional collateral, which is more liquid and safer. This can cause difficulties for newly established enterprises or enterprises with few assets.
- The procedures for borrowing SGH TTXK loans are often more complicated than other forms of loans: Enterprises must prepare many documents and meet many conditions to borrow SGH TTXK loans.
- Enterprises may face risks if the buyer does not pay: Enterprises are still responsible for paying the loan to the bank even if the buyer does not pay.
Which post-shipment export finance service provider should I choose?
SeABank (Southeast Asia Commercial Joint Stock Bank) is known as one of the leading joint stock commercial banks in Vietnam in terms of charter capital, operating network, brand awareness and stable growth rate. Understanding the concerns of businesses when having to wait for payment after delivery, affecting working capital flow and slowing down development speed, SeABank is currently providing post-delivery export financing services with outstanding benefits for businesses as follows:
- Receive cash upon delivery, meeting working capital needs promptly.
- High funding rate up to 98% of document value, optimizing capital for businesses.
- Flexible collateral, including Debt Claims formed from Contracts or Export L/Cs, reduces financial pressure.
- Free consultation on preparing export documents by SeABank's team of experienced experts.
- Simple profile, quick procedures, saving time and effort for businesses.
SeABank is a reputable provider of post-delivery export financing services.
Post-shipment export financing is the optimal financial solution to help your business increase its export strength, expand its market and increase profits. If you are looking for a reliable banking partner to support post-shipment export financing, SeABank is the top choice.
With experience and professional services, SeABank provides comprehensive financial solutions, helping your business feel secure in every transaction. Please contact SeABank immediately via website or Hotline 1900.599.952 (KHDN) for detailed advice and answers to all your questions about post-delivery export financing.
