Q.13:- Differentiate between the following
(i) Sight and usance drafts
(ii) Bill of lading and airway bill
(iii) Pre-shipment and post-shipment finance
Answer:-
(i) Sight and usance drafts
|
Sight drafts
|
Usance drafts
|
| Documents are handed over to the importer once he or she agrees to sign the draft. | Documents are handed over to the importer after the acceptance of the bill of exchange. |
| Payment is made at the time of issuing the draft. | Payment is made on the expiry of a specified period. |
(ii) Bill of lading and airway bill
|
Bill of lading
|
Airway bill
|
| Issued by shipping companies. | Issued by airline companies. |
| Goods are sent by ship. | Goods are sent by air. |
(iii) Pre-shipment and post-shipment finance
|
Pre-shipment finance
|
Post-shipment finance
|
| Credit is obtained before the shipment of goods. | Credit is obtained after the shipment of goods. |
| Used for purchasing raw materials to undertake production activities, packaging of goods and transporting goods to the port of shipment. | Used for financing activities from the date of receiving credit till payment is received from the importer. |