Pre-Shipment Finance UK 2026

UK trade finance that funds production costs (raw materials, labour, freight) between receiving a confirmed order and shipping the goods. The lender advances against the confirmed order; you produce and ship; the buyer pays the invoice; the lender repaid principal plus fee.

Pre-shipment funds the production cycle (order to ship). Post-shipment funds the payment cycle (ship to payment). Many UK exporters use both: pre-shipment to fund production, post-shipment (invoice finance) to fund the 30-90 day payment terms. Combined, they cover the full order-to-cash cycle.

Contract manufacturers winning large export orders, food and drink exporters with seasonal production, fashion brands fulfilling wholesale orders, OEM electronics manufacturers, and importers buying from overseas suppliers under letter of credit. Anyone with a confirmed order whose production cost exceeds their working capital.

On letter of credit (LC) backed exports, pre-shipment finance is often structured as 'packing credit' or 'red clause' financing. The LC issuing bank or a specialist trade finance lender advances funds against the LC itself, with the LC providing security. Once goods are shipped and documents presented to the LC bank, the LC pays the original lender and the exporter receives any balance. Used heavily for exports to emerging markets where end-buyer credit isn't directly bankable.

Bibby Financial Services lists pre-shipment and purchase order trade finance in its own trade finance guide, and Trade Finance Global (a broker across multiple lenders) is another starting point. For LC-backed transactions, the trade finance teams of the major UK banks are the usual route.

Invoice finance providers such as Optimum Finance (now part of eCapital) fund the post-shipment invoice rather than production. Stenn, formerly a major export specialist, entered administration in December 2024 (joint administrators Interpath Advisory) and is no longer an option. Get at least 2 quotes.

Fees are quoted per deal. Effective APR depends on production-to-payment cycle length: as an illustration, a 3% fee on a 60-day cycle equals roughly 18% APR. Arrangement fees on facility setup may apply too. Lower than emergency working capital loans but higher than invoice finance, reflecting the production risk being absorbed by the lender.