Purchase order finance
Also known as pre-shipment finance, this is made available to a seller based on a purchase order received from a buyer. This financing can cover all the related working-capital needs of the seller, including raw materials, wages, packing costs and other pre-shipment expenses. The buyer's bank issues its commitment to pay the seller (at sight or at maturity) once the seller ships and makes available the required documents that match the purchase order and other stipulated conditions. This service allows the seller to take the risk of the bank issuing its commitment to pay instead of that of the buyer.