Trade Financing​
Trade Financing​

What is Trade Financing?

Trade financing is the financing of domestic and international trade and commerce. Trade finance consists of many different financing instruments like invoice factoring, import financing, export financing and insurance, lending and the issuance of letters of credit. It can provide for working capital financing on underlying trade transactions via supplier invoices or trade receivables.

Typically, the parties that are involved with trade finance include importers and exporters, banks and institutional financiers, trade credit insurance companies, and  service providers.

Import Financing

Trust Receipts

Letter of Credit

Invoice Factoring

Trade Facilities

A trade facility is a financing product related to trade finance. Trade financing is the process of financing various activities associated with commerce and international trade, such as invoice financing, letters of credit, invoice factoring, and purchase order (import) financing.

Unlike business loans, repayment terms in trade finance are generally between 30 – 120 days. This financing acts as a safety net to protect the interests of buyers and sellers in an international marketplace.

Simply put, trade facilities serve to reconcile the divergent needs of an exporter and importer.

With the assurance of having sufficient funding to start on new projects, and sufficient cash flows to sustain the business while awaiting payments from clients, trade finance now gives you the confidence to embark on bigger projects and focus on growing the business.

Trust Receipts

A financing facility that allows you to collect your local/foreign purchases before payment of the Sight Bills/Usance Bills, as payment to suppliers is advanced by the bank

Maximum tenor:
Up to 180 days, determined based on the turnover period of goods

Margin of advance:
100% of the bill amount plus other payments e.g. freight / carrier charges and import duties

Features

  • A mode of financing for goods purchased under Letter of Credit or  Inward Documentary Collection only
  • Financing is available for other separate payments such as freight/carrier charges and import duties
  • Early or partial settlement is allowed
  • No minimum amount or tenor of financing: financing can be on invoice value for any number of days required, subject to your facility tenor/limit
  • Also available under Islamic financing as Murabahah Trust Receipt-i
  • You must have a facility with the bank
  • Backed by over 400 branches nationwide, a network of over 80 international offices and more than 800 correspondent banks worldwide

Benefits

  • Settle your payment obligations to the seller promptly and maintain a good standing
  • Take possession of the goods immediately without having to repay until the end of the financing period
  • Sell the goods or turn them into finished products for sale or export without further delay
  • Improve your company’s cash flow
  • Make partial payments as and when you have the funds

Letter of Credit (LC)

Letter of credit (LC) is a major payment method in international trade because it benefits both parties in the transaction.
 
As the buyer, you don’t have to pay until the documents are received in good order. Your seller is also comfortable because they will definitely be paid if they have complied with the terms of the LC. You’ll enjoy :
    1. Trust, because payment will only be made if
      – All stipulated documents are received in good order
      – All the terms and conditions of the LC are complied with
    2. Financing, which can be arranged for bills under LC
    3. Reduced risk for both commercial and foreign exchange

Invoice Financing

Invoice Financing releases cash currently tied up in outstanding customer invoices – ideal for funding expansion plans or improving your cashflow. There are two main types: factoring and invoice discounting.

With factoring we provide both funding and credit control. With invoice discounting only the funding is provided.

Benefits

  • Speed – Access to the funds held in your invoices within 24 hours so you don’t have to wait to be paid
  • Cost-effective – We aim to give you the best value we can based on your specific requirements.
  • Choice – Outsource your credit control and sales ledger management to our expert teams or handle them yourself
  • Personal – Our country-wide presence and relationship managers ensure we can give a more personal service
  • Control – Check your funding at all times with our 24/7 online management system
  • Confidentiality – Our confidential service means we won’t disclose you are using an invoice finance facility
  • Security – Protect against customer insolvency with Bad Debt Protection
Enquiries? Questions?

Send us an email, and our team of friendly consultants will get back to you at the earliest possible time.

Alternatively, you may wish to give us a call at +65 8815 7966 or visit us at our offices at 334 Kreta Ayer Road, #01-05, Singapore 080334 between our opening hours of  9am to 5pm.