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Bank Financing Exporter on a Usance Bill of Exchange (BE)

When an exporter draws a usance BE on the importer, he is giving a credit period and this credit period given depends on the terms of the sales contract between them. The exporter has to wait until the importer pays on due date of the BE. (The credit period enables the importer to take delivery of the goods, sell them and receive proceeds from his customers). If the exporter/seller is not willing to wait for the payment and he requires funds immediately, he can present his documents to his bank and request his bank to purchase the usance BE.

Bank Financing Exporter on Sight Bill of Exchange (BE)

When an exporter draws a sight BE on the importer, he is not giving any credit to his importer i.e. the importer has to make payment upon sighting the BE from the exporter. Though payment is made immediately by the importer, there is a time period involve between the time the exporter presents the documents to his bank and the time of receipt of proceeds from the importer (drawee) which may range between 7 to 20 days depending on the place, postage and other factors. During this interim period the exporter may present the documents to the bank, and the bank may finance the exporter by purchasing the said documents and credit the proceeds to his account immediately. After 20 days the bank will receive the proceeds from the importer on due date.