Trade Finance Japan | 2020 Trade Finance Guide

2021 Guide | Trade Finance Global

Trade Finance - Japan

Welcome to the Japan Trade Finance and International Trade hub. Find out how our Japan-based team can help you access trade finance to increase your imports and exports, or find the latest research, information, and insights on trade finance here.

What is trade finance?

Trade Finance is the financing of goods or services in a trade or transaction, from a supplier through to the end buyer. It accounts for 3% of global trade, worth some $3tn annually. ‘Trade Finance’ is an umbrella term, which includes a variety of financial instruments that can be used by an importer or exporter.

These include:

  • Purchase Order Finance
  • Stock Finance
  • Structured Commodity Finance
  • Invoice Finance (Discounting & Factoring)
  • Supply Chain Finance
  • Letters of Credit (LCs) and;
  • Bonds & Guarantees

The terms Import Finance and Export Finance are used interchangeably with Trade Finance.

In order to address some of the common issues and misunderstandings around Trade Finance, we have put together this short guide.

How can trade finance benefit my Japan-based business?

Trade finance facilitates the growth of a business by securing funds required to purchase goods and stock. Managing cash and working capital is critical to the success of any business. Trade finance is a tool which is used to unlock capital from a company’s existing stock or receivables or add further finance facilities based on a company’s trade cycles.

Why does this help? A trade finance facility may allow you to offer more competitive terms to both suppliers and customers, by reducing payment gaps in your trade cycle. It is beneficial for supply chain relationships and growth.

Other benefits of trade finance

  • Short to medium-term working capital, using the underlying products or services being imported/exported as security/collateral. It increases the revenue potential of a company, and earlier payments may allow for higher margins.
  • Trade finance allows companies to request higher volumes of stock or place larger orders with suppliers, leading to economies of scale and bulk discounts. 
  • Trade finance can also help strengthen the relationship between buyers and sellers, increasing profit margins. It allows a company to be more competitive.
  • Managing the supply chain is critical for any business. Trade and supply chain finance helps ease out cash constraints or liquidity gaps – for suppliers, customers, third parties, employees or providers. Earlier payments also mitigate risk for suppliers.

It is important to note that trade finance focuses more on the trade than the underlying borrower, i.e. it is not balance sheet led. Therefore, small businesses with weaker balance sheets can use trade finance to trade significantly larger volumes of goods or services and work with stronger end customers.

Due to the embedded risk mitigants that surround trade finance lending and instruments, it leads to the potential of a diversity of supplier base for trading companies. A more diverse supplier network increases competition and efficiency in markets and supply chains.

Companies can also mitigate business risks by using appropriate trade finance structures. Late payments from debtors, bad debts, excess stock and demanding creditors can have detrimental effects on a business. External financing or revolving credit facilities can ease this pressure by effectively financing trade flows.


Get started – talk to our Japan team

If you have a trade finance enquiry, please use the contact form below.


Finance Queries:

Partnership Queries:

Find out more about partnering with us here.


Want to learn more about Trade Finance?

Look no further. We’ve put together our feature Japan trade finance insights, research and articles, and you can catch the latest thought leadership from the TFG, listen to podcasts and digest the latest in international trade in the region right here.

From the Editor – Trade Finance Insights

ITFA and Sullivan & Worcester issue joint guidance on the use of Risk-Free Reference Term Rates in Trade and Export Finance The guidance note looks at Term SOFR (SOFR is the Secured Overnight Financing Rate), the ARRC recommended RFR term rate
Open Banking: Forget about cloud and APIs – it’s all about value generation The trade finance space has seen a huge influx of capital in the development of fintech solutions to address some of today’s most pressing trade challenges.
Fireside chat: Contour, on platforms, competition and the misconceptions of interoperability The need for trade digitization has never been more prevalent than it is today, especially with pandemic-induced restrictions emphasizing the inefficiency of paper-based trade. Our Editor, Deepesh Patel sat down with Contour’s CEO and Chief Product Officer, as well as TradeLens’ Head of Strategy and Operations, to discuss how fintech can come together to partner to solve these problems.
Mapping supply chains amid a global crisis How interactive tools can empower firms to trace vital supplies in times of crisis
Post-covid Asia will grow strongly in 2021 but structural problems to pile up 2020 was a terrible year for Asia but for some less than for others. Alicia Herrero Garcia outlines what’s in stock for markets in Asia in 2021
The Regional Comprehensive Economic Partnership (R.C.E.P): A return to multilateralism On the 15th November, 2020 several Heads of State/ Government of the Member states of the Association of Southeast Asian Nations (ASEAN) and other nations met virtually to witness the signing of The Regional Comprehensive Economic Partnership (RCEP) agreement – solidifying over 8 years of negotiations and challenges.
Natixis Chief Economist Insights VIDEO: Natixis Chief Economist Insights – How well are Asian markets faring? Covid-19 pandemic, the rise of techno-nationalism, US-China trade war, and Singapore string of frauds – just how well are the Asian markets responding to these issues?
Mitsubishi Corporation RtM Japan Goes Live With ECO, Powered By Skuchain’s Blockchain-Based EC3 Platform Skuchain, Inc. announced today the launch of the ECO system for precious metals trading, a joint project with Mitsubishi Corporation RtM Japan Ltd., the minerals trading subsidiary of Mitsubishi Corporation.
Taking Stock of 2019 – A Round-Up of 8 Themes in Trade Finance Events such as Brexit, the US-China trade war, political unrest between China and Hong Kong dominated the headlines in 2019, have all had significant implications on global trade. However, it has not all been bad news – with increased levels of cooperation and technological innovation, the outlook for trade/finance moving into 2020 could be promising.

Videos – Trade Finance

Trade Finance Frequently Asked Questions

What types of Trade & Receivables Finance does TFG offer?

TFG assists companies to access trade and receivables finance through our relationships with 270+ banks, funds and alternative finance houses.

We assist specialist companies to scale their trade volumes, by matching them with appropriate financing structures – based on geographies, products, sector and trade cycles. Contact us to find out more.

Trade Finance & Stock Finance

  • Trade Finance (Purchase Order Finance)
  • Stock Finance
  • Pre Export Finance
  • Import & Export Finance
  • Structured Commodity Finance
  • Letters of Credit
  • Bonds & Guarantees

Receivables Finance & Invoice Finance

  • Receivables Purchase
  • Invoice Finance
  • Discounting
  • Factoring
  • Supply Chain Finance

Specialist Trade & Receivables Finance

  • Borrowing Base Facilities
  • Back-To-Back LC Lines
  • Long Dated Receivables – Media, Sport
  • Revolving Credit Facilities (RCF)
What is the process for applying for trade finance?

1. Application

The initial ‘credit’ application drives the process when applying for credit.

Lenders will often ask for information on current assets or collateral that the business owns, including debt and overdrafts, assets that the company or directors own (property, equipment, invoices).

2. Evaluating the Application

The evaluation process will normally involve some kind of credit scoring process, taking into account any vulnerabilities such as the market the business is entering, probability of default and even the integrity and quality of management.

3. Negotiation

Eligible SMEs applying for trade finance can negotiate terms with lenders. An SME’s aim with a lender is to secure finance on the most favourable terms and price. Some of the terms that can be negotiated can include fees and fixed charges, as well as interest rates.

4. The Approval Process and Documentation of a Loan

Typically, the account officer who initially deals with the applicant and collects all of the documentation will do an initial credit and risk analysis. This then goes to a specific committee or the next level of credit authority for approval. If the loan is agreed (on a preliminary basis) it goes to the legal team to ensure that collateral can be secured/ protected and to mitigate any risks in the case of default.

Read our full ‘trade finance application process’ here.

Strategic Partners:

Get in touch with our Japan trade team

Speak to our trade finance team

Quick Links

Latest Japan feature from Trade Finance Talks

Download our free trade finance guide

Latest Japan Trade News


TFG Weekly Trade Briefing, 16th August 2021


Your morning coffee briefing from TFG. Japan’s economy starts to show signs of growth after being slow to bounce back… Read More →


Ocean Partners Secures Increase in Syndicated Borrowing Base Facility


Privately-owned base metal trading company successfully renews and increases its Syndicated Uncommitted Secured Revolving Borrowing Base Facility. London, 11th August… Read More →


Singapore is the first country to ratify RCEP trade deal


Singapore has ratified the Regional Comprehensive Economic Partnership (RCEP) trade agreement, with plans to implement the accord on the 1st… Read More →


Mapping supply chains amid a global crisis


How interactive tools can empower firms to trace vital supplies in times of crisis… Read More →


Post-covid Asia will grow strongly in 2021 but structural problems to pile up


2020 was a terrible year for Asia but for some less than for others. Alicia Herrero Garcia outlines what’s in… Read More →


ADB increases commitment to clean energy in ASEAN region


Manila, Philippines (2 February 2021) — The Asian Development Bank (ADB) and Japan’s Ministry of Economy, Trade and Industry (METI)… Read More →


Voice of the CBI: What is the UK’s Independent Trade Agenda?


We heard from the CBI’s Andy Burwell, on the UK’s independent trade agenda post Brexit, focusing on the EU, Japan… Read More →


CEPA or CPTPP? An Overview of UK-Japan Trade


Today’s podcast focuses on the Free Trade Agreement, FTA with Japan, more specifically referred to as the Comprehensive Economic Partnership… Read More →


TFG Partners with City & Financial at the UK-Japan Free Trade Summit


Announced: latest confirmed speakers for the UK-Japan Free Trade Summit: A Shared Political, Economic and Financial Vision for Mutual Benefit… Read More →


The Regional Comprehensive Economic Partnership (R.C.E.P): A return to multilateralism


On the 15th November, 2020 several Heads of State/ Government of the Member states of the Association of Southeast Asian… Read More →


UK And Japan Sign Historic Free Trade Agreement


The UK–Japan Comprehensive Economic Partnership Agreement (CEPA) is the first deal that the UK has struck as an independent trading… Read More →


Government secures access for British business to £1.3 trillion of global procurement contracts


DIT has today announced that British businesses will be able to continue bidding for public sector contracts around the world… Read More →


VIDEO: Natixis Chief Economist Insights – How well are Asian markets faring?


Covid-19 pandemic, the rise of techno-nationalism, US-China trade war, and Singapore string of frauds – just how well are the… Read More →


Podcast: Does Free Trade really work? The Good, Bad and Ugly of Trade


Today we’re joined by UKTPO’s L. Alan Winters, talking about the power of good trade policy, how trade negotiations are… Read More →


Expert panel on UK Trade Negotiations


A panel of leading economists and trade experts will help DIT develop cutting-edge trade models to reflect the modern economy… Read More →


UK and Japan agree historic free trade agreement


The UK has today secured a free trade agreement with Japan, which is the UK’s first major trade deal as… Read More →


UK takes major step towards membership of Trans-Pacific free trade area


The UK has today taken a major step in the process of joining CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific… Read More →


The International Islamic Trade Finance Corporation and Mizuho Bank Malaysia Sign US$100 million Trade Financing Deal


Jeddah, Saudi Arabia, 9th September 2020. The International Islamic Trade Finance Corporation (ITFC), member of the Islamic Development Bank (IsDB) Group, signed a US$100… Read More →

Back to Top