Trade Finance – Singapore

2021 Guide | Trade Finance Global

Trade Finance - Singapore

Welcome to the Singapore Trade Finance and International Trade hub. Find out how our Singapore-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 Singapore 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 Singapore team



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

 

Finance Queries:

sg.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 Singapore 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

VIDEO: Philip Bowkley industry leader perspective: The future of global payments, cash and liquidity Philip Bowkley, co-chair of BAFT’s Global Payments Industry Council talks to TFG about the future of global payments, cash and liquidity
Why we need to stop talking about Bitcoin Elon Musk’s frenzied announcements around this one cryptocurrency detract from the wider-reaching benefits of DLT
Global experts have their say at the World Trade Symposium 2021 The Virtual World Trade Symposium 2021 got started today. Hosting a wide range of global experts, here are some of the top insights.
VIDEO: Standardisation 2.0 – ICC DSI’s 5 year plan – Fireplace chat with Oswald Kuyler Oswald Kuyler, Managing Director of ICC DSI talks to TFG about promoting digital trade, harmonisation and trade standards.
Singapore paves path towards trade digitalisation Singapore is second only to Bahrain in adopting MLETR
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.
VIDEO: Spotlight On – Agribusiness – Key developments in commodity markets (agri and softs) TFG spoke to an expert group of global commodity traders to look at the key developments in commodity markets over the past few months, with a focus on the agri and softs sector.
Trade Finance Registry: Singapore launches the world’s first blockchain-based solution aimed at preventing double financing fraud Banks and government bodies rally together to mitigate trade finance fraud with Trade Finance Registry
Singapore IMDA and MOI sibos SWIFT and Singapore’s IMDA Join Forces to Drive Global Trade Digitalisation SWIFT and Singapore’s Infocomm Media Development Authority (IMDA) today signed a Memorandum of Intent (MOI) to accelerate trade digitalisation globally.

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 Singapore trade team

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Quick Links

Latest Singapore feature from Trade Finance Talks

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Latest Singapore Trade News

18Feb

VIDEO: Standardisation 2.0 – ICC DSI’s 5 year plan – Fireplace chat with Oswald Kuyler

0 Comments

Oswald Kuyler, Managing Director of ICC DSI talks to TFG about promoting digital trade, harmonisation and trade standards. … Read More →

17Feb

Singapore paves path towards trade digitalisation

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Singapore is second only to Bahrain in adopting MLETR… Read More →

02Feb

How to bring commodity finance into the twenty-first century

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A reliance on paper has hindered commodity finance for far too long. It should welcome digitalisation with open arms. … Read More →

26Jan

MC Payment set to become Singapore’s first listed digital payments firm

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SINGAPORE 26 January 2021 – Artivision Technologies Ltd. shareholders have approved the proposed reverse takeover (RTO) of electronic payments company,… Read More →

25Nov

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

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

12Nov

Gunvor closes USD $1.225 billion revolving credit facility (RCF)

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GENEVA (10 November 2020) – Gunvor Group Ltd (“Gunvor” or the “Group”) has signed a USD 1.225 billion revolving credit… Read More →

10Nov

VIDEO: Spotlight On – Agribusiness – Key developments in commodity markets (agri and softs)

0 Comments

TFG spoke to an expert group of global commodity traders to look at the key developments in commodity markets over… Read More →

08Oct

Trade Finance Registry: Singapore launches the world’s first blockchain-based solution aimed at preventing double financing fraud

0 Comments

Banks and government bodies rally together to mitigate trade finance fraud with Trade Finance Registry… Read More →

05Oct

SWIFT and Singapore’s IMDA Join Forces to Drive Global Trade Digitalisation

0 Comments

SWIFT and Singapore’s Infocomm Media Development Authority (IMDA) today signed a Memorandum of Intent (MOI) to accelerate trade digitalisation globally…. Read More →

17Sep

Mastercard and Asian Development Bank build multi-stakeholder alliance to digitalize supply chains for wholesalers and retailers

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• Creates a new digital pathway to credit for wholesalers for better cash flow management and inventory investments • Collaborative… Read More →

08Sep

ICC Announces Oswald Kuyler as the DSI’s Managing Director

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ICC – renowned for its global standards that enable trillions of dollars of cross-border transactions each year – has announced… Read More →

01Sep

Will Singapore Lose its Lustre Over the Commodities Financing Saga?

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Barings Bank collapse. Noble Group’s demise. The 2020 commodities scandals of Agritrade, Hin Leong, Zenrock, Sugih Energy and Hontop Energy…. Read More →

27Jul

SMBC accelerates trade finance digitalisation using blockchain technology

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TOKYO July 21 2020 — Sumitomo Mitsui Banking Corporation (“SMBC”, President and CEO: Makoto Takashima) signed a (1) Letter of… Read More →

16Jul

Atradius Exclusive: The Asian insolvency storm – trade credit insurance overview

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TFG heard from Andreas Tesch of Atradius on the status of credit insurance market in Asia and the key initiatives… Read More →

09Jul

How COVID-19 Has Impacted The Shipping Industry

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We dive deeper into how Covid-19 impacted the shipping industry. Will the cruise liners be able to financially recover from… Read More →

02Jul

PODCAST: ‘China Plus One’ Strategy – Best of Both Worlds? (S1 E45)

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TFG heard from Dr. Deborah Elms, CEO, Asian Trade Centre on the impact of COVID19 for businesses in Asia Pacific… Read More →

24Jun

Contour partners with essDOCS following successful Rio Tinto & Baosteel transaction

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Singapore & Malta, 23 June 2020 Contour, the Singapore-based open trade finance network, today announced its partnership with essDOCS, the leading enabler… Read More →

03Jun

Agrocorp receives $50M from FMO and Rabobank to enhance food supply chains

0 Comments

Singapore, June 2, 2020 – The COVID-19 pandemic has challenged food supply chains globally and especially in developing markets in… Read More →

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