Hi guys,

I am looking into banker's Acceptance but could not really find the difference between it and OD. OD is something like you and withdraw more than available amount in the account to a certain limit while Bankers Acceptance works similar way. So you can pay creditor earlier while waiting for the client to pay us. So which one is actually better/offer lower rate?

By the way, I am doing exporting business. Some of my cargoes are going to African countries and may take 50-60 days before they reach destination. That's causing some cash flow short while waiting for the payment. If any of you are into commercial/corporate banking and would be able to help me, please pm.

Thanks!

Banker's Acceptance is the right product for you.

BA is for a fixed time period with no early redemption. The rate is lower than an OD

For an Overdraft, you can withdraw and payback at anytime while you are still under limit and you pay more for this convenience

Why not go for trade financing? That way for each consignment you can use individual trade bills.

Thanks for explaination. I can assume they are similar but BA i have to pay in certain agreed date probably after 1-3 months. While DO i can settle early or any time just but just serve the interest.

By that i probably save more with DO if i just need a quick borrowing like 2-3 weeks compare to fix 2 month with Ba? Am i right?

Do you know how different the rate between the 2?

The rates for each product are decided by the bank depending on their risk appetite and your credit worthiness. Probably best to refer to your own banker for the exact difference. Generally speaking you should use a fixed tenure loan when your income stream can be reliably predicted, and a flexible loan when revenue is uncertain.

You can also refer to Exim bank who claim to be specialists in International trade financing.

Should insist on fob or ex-work term.

I wish but my business nature does not work like that. It is standard for our industries for Cash against document. Mostly on arrival basis.