?> Trade Finance Japan - Need Trade Finance? | 2022 Ultimate Trade Finance Global Guide

Trade Finance Japan | 2022 Trade Finance Guide

2022 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:

jp.team@tradefinanceglobal.com

trade.team@tradefinanceglobal.com

Partnership Queries:

introducers@tradefinanceglobal.com

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

Here today, gone tomorrow next-gen trade finance Here today, gone tomorrow: next-gen trade finance During the panel session ‘unlocking liquidity with collaborative trade finance’ at the finanzsymposium in Mannheim in May, TFG spoke with German and Scandanavian fintech professionals about their thoughts on the future of trade finance, and what solutions they think are needed for the next generation.
Fintechs have an advantage but t at risk of wasting it Fintechs have an advantage, but they’re at risk of wasting it Fintech growth over the last five years has been exponential, with investment in UK fintech hitting £27.5 bn in 2021 – but the high reward also means high risk.
near term outlook for container shipping remains strong despite disruptions Near term outlook for container shipping remains strong despite disruptions Despite port congestion woes, COVID-19 lockdowns in Asia and vessel availability issues, the container shipping sector remains in boom territory. TFG investigates. 
The race is on Will China dominate EV production, or will the EU and Japan rise to the challenge The race is on: Will China dominate EV production, or will the EU and Japan rise to the challenge? The race is on to lead the world in electric vehicle (EV) production. Will China dominate, or will the EU and Japan forge ahead?
Lin Hui FCI Trade Finance Global After two decades of steady growth, are we at a breakthrough moment for factoring in Asia? Twenty years ago Asia had a 12% share of the global factoring market. Today that share is 25%.

In this article, FCI’s Lin Hui looks at factoring’s two decades of steady growth in Asia, and where the industry goes from here…

2021 Year in Review 2021 – A Year in Review with Trade Finance Global As the clocks struck midnight, we looked back at over 700 articles, handpicking our favourite stories that made the headlines in 2021
Steven Beck - Asian Development Bank Mapping supply chains amid a global crisis How interactive tools can empower firms to trace vital supplies in times of crisis
Alicia_Garcia_Herrero_Natixis_Post-covid_Asia_will_grow_strongly_in_2021_but_structural_problems_to_pile_up_ 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
RCEP 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.

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

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About the Author

Sheena Magdaraog is responsible for the TFG Weekly Trade Briefings at Trade Finance Global.

With an extensive background in WordPress CMS and Digital Marketing, she loves the digitalization of trade and is fascinated about its impact on day to day transactions.

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