---
title: "Export Finance"
space: "Wiki"
url: "https://jmtradelink.com/docs/exim/export-finance"
updated: "2026-07-05"
---

# Export Finance — Pre & Post Shipment

Export houses run on bank finance: **packing credit (PCFC)** before the goods ship, and **post-shipment finance** against the invoice while the buyer's payment is in transit. Exim models both as submittable documents that post the bank Journal Entries for you and keep the loan ledger straight.

## Pre Shipment (PCFC)

A **Pre Shipment** is a packing-credit drawdown in foreign currency (typically USD) against a specific Sales Order, Sales Invoice, or Contract Term — or as a *running* account with no specific document.

![Pre Shipment](/files/exim-pre-shipment.png)

Filling it in:

1. **Against + Document** — what the loan finances (or tick *Running*).
2. **Credit currency & loan amount** — e.g. USD 50,000 out of the order's USD 88,750.
3. **Banks & accounts** — funding bank (Indian), the **Loan Account** (a bank-type account in the loan currency) and the **Loan Credit Account** (where the INR lands).
4. **Forwards** — optionally split the drawdown across open forward contracts; whatever isn't covered by forwards is the **cash amount** at the spot **cash rate**. The document's exchange rate is the weighted average of forward and cash rates, and the split must reconcile to the loan amount exactly.
5. **Bank loan reference** — the bank's PCFC reference; required to submit.

On submit, a **Bank Entry** JV posts (credit loan account in USD, debit the INR credit account), the utilized forwards get utilization rows, and the loan shows as **Outstanding**.

## Post Shipment

After shipment, the bank converts packing credit into post-shipment finance (e.g. foreign bill purchase). The **Post Shipment** document draws the new loan and **repays Pre Shipments** in the same movement:

![Post Shipment](/files/exim-post-shipment.png)

- The **Repayments** table lists the Pre Shipments being squared off — each row carries the pre-shipment's outstanding, its loan account, and the amount repaid.
- The JV credits the post-shipment loan account and debits each repaid pre-shipment's loan account; any un-applied difference lands in the loan credit account.
- Each repaid **Pre Shipment** gets a repayment row and its status advances (Outstanding → Partially Paid → Paid).
- Like Pre Shipment, it can utilize forward contracts for the conversion.

## The full finance chain

```mermaid
flowchart LR
    SO["Sales Order<br/>USD 88,750"] --> PRE["Pre Shipment PCFC<br/>USD 50,000 drawn<br/>status: Outstanding"]
    PRE -->|"JV: Cr PCFC loan a/c<br/>Dr bank INR"| GL1[("GL")]
    SI["Sales Invoice<br/>shipped"] --> POST["Post Shipment<br/>USD 50,000 drawn"]
    POST -->|"repays"| PRE2["Pre Shipment<br/>status: Paid"]
    POST -->|"JV: Cr Post-shipment a/c<br/>Dr PCFC loan a/c"| GL2[("GL")]
    PE["Customer payment<br/>arrives"] -.->|"squares off post-shipment<br/>finance at the bank"| POST
```

Loan statuses at a glance:

| Status | Meaning |
|---|---|
| **Outstanding** | Full loan amount unpaid |
| **Partially Paid** | Some repayments recorded |
| **Paid** | Outstanding is zero |

Cancelling a Pre or Post Shipment reverses its JV and removes its forward-utilization and repayment rows — the chain unwinds cleanly.

> **Currency note:** the loan documents insist the sums reconcile — forwards utilized + cash = loan amount, repayment ≤ outstanding — and refuse to submit otherwise. If you see *"The sum of Total Amount Utilized and Cash Amount must be same as Loan Amount"*, adjust the forward split or the cash amount; the math has to close.