Lesson 4 · Practitioner · Both · 25 min
Trade Finance FX for Exporters
How exporters get paid, convert currency, and use trade instruments—framed for SCF and export factoring products.
Objectives
- ▸Map exporter cash-cycle stages to FX decision points
- ▸Relate LCs, bills, and open account to FX timing risk
- ▸Identify FEMA / AD bank touchpoints for INR products
- ▸Write requirements for rate transparency on export advances
Exporters ship goods, wait for payment, and convert foreign currency receipts. Working-capital products (export packing credit, factoring, invoice discounting) advance INR or USD against expected receivables—creating FX and credit risk simultaneously.
- Open account: fastest commercially, highest payment and FX timing uncertainty.
- Documentary collections / LCs: more bank involvement; FX still matters at negotiation/payment.
- Factoring: advance against receivables; currency of advance vs receivable must be explicit.
Key terms
Export factoringOpen accountLetter of creditFEMAAD bankRealization