Many UAE-based businesses face a structural challenge: buyers want extended credit terms of 60-90 days, but exporters need to pay suppliers and fund production upfront. Export finance bridges this gap — allowing UAE businesses to offer competitive payment terms without sacrificing cash flow.
Pre-Shipment Export Finance
Pre-shipment finance provides funding from the point of receiving an export order to the point of shipment. It allows exporters to purchase raw materials, fund production, and ship goods without waiting for payment. Pre-shipment finance is typically secured against the underlying export order or a confirmed LC.
UAE banks offering pre-shipment finance typically advance 70-85% of the export order value. For exporters with confirmed LCs from major banks in importing countries, the pre-shipment finance terms are generally more favourable.
Post-Shipment Finance: Bridging the Payment Gap
Post-shipment finance is provided between the date of shipment and the date of payment from the buyer. For LC-based transactions, this involves discounting the LC documents — the bank pays the exporter immediately against compliant documents and collects payment from the issuing bank at maturity.
The discount rate for post-shipment finance against LCs from prime banks is typically SOFR or EURIBOR plus a small margin — very competitive compared to standard SME lending rates.
Export Credit Insurance: Protecting Your Receivables
Export credit insurance protects UAE exporters against the risk of non-payment by overseas buyers — due to insolvency, political events, or protracted default. The insurance allows exporters to extend credit terms confidently to new or untested buyers.
Etihad Credit Insurance (ECI) — the UAE's official export credit agency — offers export credit insurance and financing support for UAE exporters. ECI-backed finance is available at preferential rates for qualifying UAE export transactions.
Structuring an Export Finance Programme
The most effective export finance structures combine multiple instruments: pre-shipment finance to fund production; post-shipment LC discounting for LC-based sales; export credit insurance for open account receivables; and ECI support for priority markets.
Gulf Oasis Commercial Brokers structures export finance programmes for UAE-based manufacturers and traders — working with UAE banks and ECI to create facilities that support growth into new markets without cash flow constraints.