Differentiate between the following :
- Sight and usance drafts.
- Bill of lading and airway bill.
- Pre-shipment and post-shipment finance.
1.Sight and usance drafts : In the case of sight draft, the drawer instructs the bank to hand-over the relevant documents to the importer only against payment. But in case of usance drafts, the drawer instructs the bank to hand over the relevant documents to the importer against acceptance of the bill of exchange.
2. Bill of lading and airway bill : BUI of lading is a document prepared and signed by the master of the ship acknowledging the receipt of goods on board. It contains terms and conditions on which the goods are to be taken to the port of destination. On the other hand, an airway bill is a document wherein an airline/shipping company gives its official receipt of the goods on board its aircraft and at the same time, gives an undertaking to carry them to the port of destination. It is also a document of title to the goods and as such is freely transferable by the endorsement and delivery.
3. Pre-shipment and post-shipment finance : Under pre-shipment finance, finance is provided to an exporter for purchase, processing, manufacturing or packing of goods for export purposes.
On the other hand, under post-shipment finance, finance is provided to the exporter from the date of shipment of goods to the date of realisation of export proceeds.