Trade Finance – Singapore

2024 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

Trade transactions: Remove the paper – keep the process The Middle East has recently thrived by capitalising on digital advancements across various sectors.
icc austria saibo jin web featured VIDEO | The Year of Dragon and the year of the guarantee: How ICC Austria’s Trade Finance Week helps perfect the SPC’s guarantee rules Hear from Jin Saibo, Attorney at Law, Beijing Jincheng Tongda & Neal Law Firm about the evolving landscape of trade finance, China’s integration of international standards and the country’s innovative transition towards digital negotiable instruments.
Kai Fehr Web Featured VIDEO | Unlocking global prosperity whilst running the ‘hamster wheel’ for trade finance Deepesh Patel spoke with Kai Fehr, Global Head of Trade and Working Capital at Standard Chartered Bank at FCI’s 56th Annual Meeting in Seoul.
IFC and DBS Launch $500m facility to promote trade flows in emerging markets IFC and DBS Launch $500m facility to promote trade flows in emerging markets Learn how IFC and DBS Bank are bridging the global trade finance gap and supporting trade financing in emerging markets.
Revolutionising trade documentation: Secro's game-changing solution for eBLs VIDEO | Revolutionising trade documentation: Secro’s game-changing solution for eBLs For centuries, trade documentation has been a time-intensive and resource-demanding process, involving a multitude of stakeholders and a deluge of paperwork. Central to this process is the bill of lading, the most critical document in international trade. 
HSBC launches just-in-time trade finance solution TradePay in Hong Kong, Singapore, UAE HSBC launches just-in-time trade finance solution TradePay in Hong Kong, Singapore, UAE HSBC today announced the launch of HSBC TradePay, an industry first, document free trade finance solution that enables clients to instantly drawdown trade loans and pay suppliers. HSBC TradePay is… read more →
stanchart green finance sponsor Standard Chartered launches sustainable trade loan for financial institutions The offering will focus on sustainable end-use within the renewable energy sector 18 September 2023, Singapore – Standard Chartered today launched a sustainable trade loanoffering for financial institutions. The new offering supports… read more →
EU-Singapore launch digital trade negotiations-WF EU-Singapore launch digital trade negotiations Today, the EU and Singapore commence negotiations on a digital trade agreement. This proposed agreement is poised to provide legal assurance for comprehensive digital trade and to enhance protections for… read more →
UK to join Indo-Pacific trading bloc UK to join Indo-Pacific trading bloc Business and Trade Secretary Kemi Badenoch officially signed the accession treaty to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in New Zealand, marking the beginning of the UK’s… read more →

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

Speak to our trade finance team

Quick Links

Latest Singapore feature from Trade Finance Talks

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Latest Singapore Trade News

02Apr

IFC and DBS Launch $500m facility to promote trade flows in emerging markets

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Learn how IFC and DBS Bank are bridging the global trade finance gap and supporting trade financing in emerging markets…. Read More →

17Nov

Monetary Authority of Singapore announces live trial of CBDCs in 2024

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According to Ravi Menon, the Monetary Authority of Singapore’s (MAS) managing director, Singapore is set to trial the live issue… Read More →

14Nov

Kuvera Resources v J.P. Morgan Chase: Certainty of payment vs risks of breaching sanctions under Letters of Credit

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The overreaching arc of sanctions regulations is threatening the certainty of payments guaranteed by the smooth functioning of letters of… Read More →

26Sep

VIDEO | Revolutionising trade documentation: Secro’s game-changing solution for eBLs

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For centuries, trade documentation has been a time-intensive and resource-demanding process, involving a multitude of stakeholders and a deluge of… Read More →

19Sep

HSBC launches just-in-time trade finance solution TradePay in Hong Kong, Singapore, UAE

0 Comments

HSBC today announced the launch of HSBC TradePay, an industry first, document free trade finance solution that enables clients to… Read More →

18Sep

Standard Chartered launches sustainable trade loan for financial institutions

0 Comments

The offering will focus on sustainable end-use within the renewable energy sector 18 September 2023, Singapore – Standard Chartered today launched… Read More →

20Jul

EU-Singapore launch digital trade negotiations

0 Comments

Today, the EU and Singapore commence negotiations on a digital trade agreement. This proposed agreement is poised to provide legal… Read More →

17Jul

UK to join Indo-Pacific trading bloc

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Business and Trade Secretary Kemi Badenoch officially signed the accession treaty to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership… Read More →

13Jul

Future of Trade: New opportunities in high growth corridors

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Globalisation is not dead, contrary to recent claims. Nowhere is this more evident than in global trade, where high-growth trade… Read More →

05Jul

Is the UK Electronic Trade Documents Bill the turning point for digital trade?

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The potential impact of the UK’s incoming Electronic Trade Documents Bill goes far beyond a boost to the country’s trade… Read More →

09May

Standard Chartered expands cross-border payments business

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Today, Standard Chartered and global payments platform Tazapay announced a partnership to deliver payments and commerce-enabling services as part of… Read More →

05May

Singapore completes first cross-border electronic transferable record trade

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Singapore has taken another step forward in being a regional leader in trade digitisation as they continue to develop programmes… Read More →

13Apr

5 tips to help avoid metal frauds

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Fraud has been a prevalent issue in commodity trading and financing over the past few years, most recently in relation… Read More →

31Mar

ADB pushes for digital trade through regional outreach program

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The Asian Development Bank (ADB), through its Trade and Supply Chain Finance Program (TSCFP), has initiated a series of discussions… Read More →

17Mar

Port of Los Angeles, Tokyo and Yokohama agree to green shipping corridor

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The Port of Los Angeles has entered into separate Memorandum of Understandings (MOUs) with the Port of Tokyo and the… Read More →

27Feb

PODCAST | Dirty financing: the slow progression of ESG

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TFG interviewed ITFA and ADB about the financing of dirty commodities and fossil fuels, and what a sustainable transition means… Read More →

21Feb

India and Singapore create cross-border digital payment system

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India and Singapore have linked their digital payments systems, UPI and PayNow, to enable instant and low-cost fund transfers in… Read More →

30Jan

Blockchain trade finance: Contour and Tata Power forge new partnership

0 Comments

Tata Power, an integrated power company in India, has partnered with Contour, a digital trade finance network based out of… Read More →

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About the Author

Gabrielle Ann Vilda previously worked as part of the editorial team at Trade Finance Global.

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