Trade Finance – Singapore

2023 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

Addressing the export challenge: EFA’s support for Australian trade For over 65 years, Export Finance Australia (EFA) has been helping businesses take on the world. Over this long history, we have gained a unique perspective on the challenges faced by exporters, and how finance can help address them. 
Breaking: LIBF endorses TFG’s Trade Finance Talks as an accredited CPD resource Trade Finance Global (TFG) is proud to announce that part of its Trade Finance Talks content has been accredited as official Continuing Professional Development (CPD) resources for a wide range of courses offered by The London Institute of Banking and Finance (LIBF).
The path to paperless: Five tips for UK businesses to prepare for digital trade documents Despite most industries witnessing digital leaps forward over the past decade, the world of trade has kept its focus on paper-based documentation. In fact, trade documents such as promissory notes, bills of lading, and performance bonds have remained relatively unchanged for centuries.
5 tips to help avoid metal frauds 5 tips to help avoid metal frauds Fraud has been a prevalent issue in commodity trading and financing over the past few years, most recently in relation to cargoes of metals.
Sponsored piece - 1 sponsor PODCAST | Dirty financing: the slow progression of ESG TFG interviewed ITFA and ADB about the financing of dirty commodities and fossil fuels, and what a sustainable transition means for trade finance.
Trade volumes and commodity predictions for 2023 Tradetech predictions for 2023 Iain MacLennan, VP of product management and trade at Finastra, and Patrik Zekkar, CEO of Enigio, Patrick DeVilbiss, head of product at CGI and Alisa DiCaprio, chief economist at R3, provided us with their predictions for the trade technology landscape in 2023.
Trade volume, commodity and insurance predictions for 2023 Trade volume, commodity and insurance predictions for 2023 TFG asked Francoise Huang, senior economist for Asia Pacific and Trade at Allianz Trade, John Miller, chief economic analyst at Trade Data Monitor, and Richard Wulff, executive director at ICISA, to give their thoughts on the 2023 trade environment.
13 common Letter of Credit and Bill of Lading frauds 13 common Letter of Credit and Bill of Lading frauds: Learning from the Solo Industries and Saad Group fraud cases At the IIBLP’s Dubai Trade Law & Compliance Conference held in Dubai on 15 March 2022, one of the panellists referred to the Solo Industries fraud in a panel discussion addressing the recent Singapore case, Credit Agricole Corporate & Investment Bank (CACIB), Singapore branch v. PPT Energy Trading Co.
ITFA’s Sean Edwards’ year in review and predictions for trade finance in 2023 ITFA’s Sean Edwards’ year in review and predictions for trade finance in 2023 According to Edwards, reducing the record-high $1.7 trillion USD global trade finance gap will be amongst the most important considerations facing the trade finance industry in 2023. The trade finance sector is developing several tools to address this issue.

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

Download our free trade finance guide



Latest Singapore Trade News

09May

Standard Chartered expands cross-border payments business

0 Comments

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

0 Comments

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

0 Comments

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

0 Comments

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

0 Comments

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

0 Comments

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

0 Comments

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 →

05Jan

Tradetech predictions for 2023

0 Comments

Iain MacLennan, VP of product management and trade at Finastra, and Patrik Zekkar, CEO of Enigio, Patrick DeVilbiss, head of… Read More →

05Jan

Trade volume, commodity and insurance predictions for 2023

0 Comments

TFG asked Francoise Huang, senior economist for Asia Pacific and Trade at Allianz Trade, John Miller, chief economic analyst at… Read More →

22Dec

Sanctions in letters of credit: Kuvera Resources Pte Ltd and JP Morgan Chase NA

0 Comments

This article was originally published on December 19 2022 by Watson Farley & Williams LLP. TFG would like to thank… Read More →

20Dec

13 common Letter of Credit and Bill of Lading frauds: Learning from the Solo Industries and Saad Group fraud cases

0 Comments

At the IIBLP’s Dubai Trade Law & Compliance Conference held in Dubai on 15 March 2022, one of the panellists… Read More →

20Dec

ITFA’s Sean Edwards’ year in review and predictions for trade finance in 2023

0 Comments

According to Edwards, reducing the record-high $1.7 trillion USD global trade finance gap will be amongst the most important considerations… Read More →

19Dec

IFC provides $32.5m loan to Singapore’s Agrocorp to help improve food security in Bangladesh

0 Comments

To improve food security in Bangladesh at a time of rising commodity prices amidst a global shortfall of staple crops,… Read More →

15Dec

Q&A | CBI’s Liliana Fratini Passi on open banking and risk appetite

0 Comments

Trade Finance Global (TFG) are delighted to have had the opportunity to speak with Liliana Fratini Passi, Managing Director, CBI,… Read More →

28Nov

Singapore deepens fintech relations with UK through a fintech, regtech and wealth management bridge

0 Comments

The 7th UK-Singapore Financial Dialogue, held last week in Singapore, saw both countries renewing a commitment to strengthen their fintech… Read More →

09Nov

VIDEO | Digitising trade and supply chain processes: TFG contributes to ICC Academy’s new CDTS course 

0 Comments

With the trade ecosystem increasingly shifting towards technological advancements, and a market saturated with options in which to digitise trade… Read More →

08Nov

Into the depth—deep-tier supply chain finance as a driver for ESG development

0 Comments

Deep-tier supply chain finance can be a powerful tool in the ESG toolkit––but implementing this innovative financing approach will require… Read More →

Visit our Global Hubs

TFG in Translation

About the Author

Gabrielle Ann Vilda is an author at Trade Finance Global

Back to Top