Advance Against Documents
Type of financing where a bank advances funds to the exporter based on the shipping documents value.
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What is Advance Against Documents?
Advance against documents refers to a financing arrangement in which a bank or other financial institution provides a loan to a buyer of goods based on the presentation of shipping documents, such as bills of lading or invoices.
This type of financing arrangement is commonly used in international trade and can help to facilitate transactions between buyers and sellers who are located in different countries and may not have established relationships or credit histories.
It can also help to mitigate risks for both parties by ensuring that the seller receives payment for the goods and the buyer receives the goods as described in the shipping documents.
Related Glossary terms
→ Advanced Charge
→ Bill of Lading (BL)
→ Commercial Invoice
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