Differentiate between the following (i) Sight and usance drafts (ii) Bill of lading and airway bill (iii) Pre-shipment and post-shipment finance



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.