Financial assistance to the exporters is generally provided by the Commercial Banks before shipment as well as after shipment of the goods. The assistance provided before shipment of goods is known as pre-shipment finance and that provided after the shipment of goods is known as post-shipment finance.
Pre-shipment finance is given for working capital for purchase of raw material, processing, packing, transportation, ware-housing etc. of the goods meant for export. Post-shipment finance
is provided for bridging the gap between the shipment of goods and realization of export proceeds. The later is done by the Banks by purchasing or negotiating the export documents or by extending advance against export bills accepted on collection basis. While doing so, the Banks adjust the pre-shipment advance, if any, already granted to the exporter.