Pre-Shipment Finance

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Pre-Shipment Finance

A short-term loan or other financing arrangement that an institution extends to a company to pay for inventory or other costs while it prepares its products for export.
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* An increase in regional or local corporate demand for other supply chain finance lend- ing base techniques, like invoice financing and pre-shipment financing.
Without such guarantees, banks are often unwilling to provide funds for risky transactions such as pre-shipment financing to enterprises that have insufficient track records.
Interoperability between participating banks is made possible by the BPO's reliance on a standard set of messages, each of which reflects events that have taken place in the physical supply chain, and "create trigger points for the provision of financial supply chain services." For example, the bank's systems could generate a message that proposes offering pre-shipment financing based on a trigger point that indicates the confirmed receipt of a purchase order, or a proposition of postshipment financing based on the receipt of an approved invoice.