Concept of pre and post shipment facility

Question

Accepted Answer

Pre and post shipment facilities refer to credit facilities provided to exporters before and after shipment of goods.

Pre-shipment facility is a credit facility provided to exporters to finance the production and processing of goods before shipment.
Post-shipment facility is a credit facility provided to exporters to finance the period between shipment of goods and receipt of payment from the importer.
Pre-shipment facility can be in the form of packing credit, which covers expenses such as raw materials, labor, and overhead costs.
Post-shipment facility can be in the form of export bills discounting, which allows exporters to receive payment immediately by discounting the export bill with a bank.
These facilities help exporters manage their cash flow and reduce the risk of non-payment.

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