1 August 2025
Many SMEs in Singapore regularly face challenges in managing cash flow, mitigating the risks of global trade, and securing timely payments from overseas customers. The lack of secure cash flow is usually the biggest pain point, as it may lead to further complications down the road. This makes it integral to bridge the payment gap as soon as possible.
As such, many businesses rely on Export Finance options, which play a crucial role in supporting small and medium-sized enterprises. These solutions help businesses reduce financial risks by restoring their access to working capital, allowing them to confidently pursue cross-border opportunities,
In this article, we cover some of the key Export Finance products offered by RHB, and share how they can help your business succeed in the field of international trade.
Export Finance options refer to a collection of financial products and services designed to support local exporters in their trade dealings. The primary goal of this financing method is to serve as a short-term solution, allowing exporters to manage costs and cover expenses such as production, raw materials, shipping, and insurance, before payment is received from their overseas clients/importers.
This type of financing is particularly important for small and medium-sized enterprises that struggle to deal with delayed payment and cash flow gaps. For these companies, it serves as a form of risk mitigation, easing the process of entering new markets and offering much-needed financial stability.
Exporters can access these financial products from specialised financial institutions, as well as banks such as RHB. These arrangements enable businesses to initiate, sustain, and expand their export operations with greater confidence, supporting growth in cross-border trade.
Enterprises with limited cash reserves benefit the most from Export Financing, as the lack of a safety net forces them to manage higher financial risks in foreign markets.
A business may find this form of financing useful when it is:
6 Export Financing Options in Singapore
RHB offers a variety of Export Financing options to help businesses manage cash flow and reduce risks when selling goods overseas. Each solution fits the needs of different organisations, depending on the transaction or export stage.
An Export Letter of Credit is a secure payment mechanism used in international trade. It is issued by the importer's bank to guarantee payment to the exporter as long as the terms of the letter are met.
The key advantage for businesses is the security that this trade product offers. Exporters are clear about the payment terms before they ship the goods and can be confident of receiving payment as long as they comply with LC requirements. This eliminates concerns about the buyer's payment schedule, as their bank’s commitment to timely repayment will allow the exporter to preserve their cash flow.
Export LCs further allow exporters to retain control over shipping documents until the agreed payment or acceptance is made. This helps prevent goods from being released ahead of schedule, ensuring the seller's interests are protected. With this solution, sellers will not need to worry about unexpected cancellations and financial loss.
By combining security and control over their shipments, an Export LC helps streamline cross-border transactions and mitigates significant financial risks for exporters.
Trade loans provide businesses with essential funding for short-term trade-related expenses. These loans are typically used for importing, exporting, and settling transactions linked to the business’s trading activities. They are also intended to accommodate transactions that are ineligible for conventional trade financing services, such as Export Letters of Credit.
Companies may secure a trade loan to cover costs such as purchasing inventory, shipping, and fulfilling customer orders.
Compared to other loan types, Trade Loans provide greater flexibility in repayment, and offer potential cost savings through interest rates. This makes it a particularly valuable financial option for companies needing to manage cash flow while dealing with international clients and service providers.
A subset of Trade Loans is Trade Discounting (TD), which allows companies to finance specific transactions tied to their operations. Goods or services financed with TD must be either resold in their original form or processed as part of the final product. Transactions often include sales of goods for export as well as services provided by industries—for example: transport, construction, or delivery.
Key expenses that can be financed by TD include freight and transport charges, customs duties, port charges, and shipping insurance premiums. This finance option serves as a bridge for exporters by providing working capital that aligns with the timing of sales and payments.
A Standby Letter of Credit (SBLC) is a widely used tool in export finance. It provides reassurance to the importer by guaranteeing payment if contractual obligations are not fulfilled by the exporter.
Banks such as RHB issue these documents as a secondary payment mechanism. If an exporter is unable to meet the terms of a trade agreement, the beneficiary may claim payment from the issuing bank under the SBLC, which serves as a safety net for international transactions. While this does not directly serve the exporter, the presence of this safety measure serves as risk mitigation for the importer, and makes them more willing to engage in trade deals.
An exporters who supports a trade agreement with a SBLC can create trust with an unfamiliar trading partner. These payment assurances foster smoother connections between businesses, especially when working with overseas clients.
Export pre-shipment financing provides exporters with working capital before goods are shipped. This allows them to purchase raw materials, process the goods, and prepare consignments for delivery to overseas buyers.
By securing finance at this stage, exporters can take on larger orders at once, which improves their leverage to negotiate with suppliers. The increased access to capital can help them ensure the timely procurement of materials and cover production costs.
This finance solution is intended for manufacturing companies who utilise and process raw materials, as well as businesses that are already exporting goods through the use of Export Letters of credit. Banks such as RHB are able to effectively finance their manufacturing processes through export pre-shipment financing, which improves liquidity and operational efficiency.
Outward Bill Collection (Documents Against Acceptance / Documents Against Payment) is a structured export finance service used for managing the payment and documentation in export transactions. This method allows the exporter to send shipping and commercial documents from their bank to the buyer’s bank.
This option is suitable for exporters who are unwilling to sell goods on an open account basis, but who do not require the higher security, cost, and complications of a letter of credit. It works best when the exporter trusts the buyer’s intention and capability to pay, which is often present when they have a prior business relationship.
Process benefits include efficient handling of export paperwork, facilitation of timely payment, and the elimination of administrative work involved in payment collection. With this solution, RHB is able to manage and submit documents needed to collect payment from the buyer’s bank, serving to streamline the process significantly.
RHB offers these specialised Export Financing trade products in order to meet the working capital needs of exporters, who require timely funding for processing and shipping. By making use of these solutions, businesses can turn receivables into immediate capital, allowing them to engage in reinvestment and growth operations without further delays.
On top of restoring their capital, the risk mitigation offered by these Export Finance options can shield businesses from the numerous credit risks involved in international transactions. This protection provides much-needed stability, giving organisations the confidence to operate in new markets.
To find out more about how RHB can further help exporters grow, contact us today.
The information presented in this article is accurate as of date of publication.
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90 Cecil Street
RHB Bank Building, Level 1
Singapore 069531
CUSTOMER CONTACT CENTRE
1800 323 0100
DOWNLOAD RHB REFLEX
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90 Cecil Street
RHB Bank Building, Level 1
Singapore 069531
CUSTOMER CONTACT CENTRE
1800 323 0100
DOWNLOAD RHB REFLEX
|
|
|
|
|
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