Working Capital Terminology

Jun 21st, 2015
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Work¬ing capital management, which involves management of the current assets and the current liabilities of a firm. A firm's value cannot be maximized in the long run unless it survives the short run. In fact, the principal reason firms fail is because they are unable to meet their working capi¬tal needs.

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EXPORT FINANCE - PRE-SHIPMENT CREDIT FCNRB loans: No authority below CCC-I can sanction FCNRB (TL) vide FD letter no. P & S/123 dt. 10.12.03 1. An exporter may require financial assistance at pre-shipment and/or post-shipment stage. Pre-shipment finance, also referred to as Export Packing Credit (EPC), is extended as working capital for purchase of raw materials, processing, packing, transportation, warehousing etc., of goods meant for exports. Post-shipment finance is extended after shipment to bridge the time-lag between the shipment of goods and the realisation of proceeds. Export finance is by and large governed by RBI directives / guidelines. For instructions on Post-shipment finance, please refer to Chapter 13-2. Pre-shipment credit can be classified as (a) Packing Credit, (b) Advance against Duty Drawback entitlements, and (c) Pre-shipment Credit in Foreign Currency (PCFC). Other facilities to exporters: In addition to the aforementioned Pre-shipment credit facilities, the Bank extends the undermentioned facilities to exporters: i) Execution of Bid Bonds/Tender Guarantees: Bid bonds/tender guarantees are issued in favour of overseas buyers in lieu of earnest money. Such guarantees have to be submitted by the exporters at the time they participate in tenders for the supply of goods/services abroad. ii) Issue of guarantees in respect of advance payments: Bank guarantees a

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