28 June 2025

11 Trade Finance Products to Leverage in Singapore (2025)

Businesses of all sizes can face challenges when navigating international trade. There are numerous risks associated with overseas dealings, and companies are often in need of solutions that grant them smoother transactions, enhanced liquidity, and the ability to expand their reach and optimise their supply chains.

RHB offers a diverse selection of trade finance products, designed to support businesses in overcoming these risks and enhance their capabilities in the field of global commerce. These offerings are tailored to meet varying needs, ensuring that firms can access the most suitable financial solutions to thrive in today's competitive market. In this article, we explore how businesses can leverage these options to position themselves for growth and success.

Common Pain Points in the Trade Industry

There are several key pain points that tend to interfere with a company's trading operations.

Cash Flow Management: One major issue is cash flow. Businesses may struggle with capital as trade transactions typically involve extended payment cycles. This situation can lead to liquidity problems for companies awaiting payment while goods are in transit.

Payment Methods: Another problem faced by import/export-based businesses is the variety of applicable payment methods that different countries make use of. These varied methods may lead to delays or additional costs of setting up payment systems and dealing with unfamiliar outcomes.

Trust Factors: Engaging with various partners such as suppliers, logistics firms, and financial institutions requires a high level of trust. Misunderstandings or delays can disrupt the trade process and cause financial loss.

Recognising these challenges, RHB offers a suite of trade finance products that are applicable at various stages of a transaction, providing tailored support to meet specific business needs. Our trade finance products offer reliability and security, and our experienced relationship managers can help businesses select the optimal product at different trade stages. Whether it involves payment, guarantees, document collection, or financing, we ensure that the needs of a business are well taken care of.

1: Import & Export Letter of Credit

An Import Letter of Credit is designed to mitigate risk in international trade. It offers a written assurance to the seller that the bank will make payment on behalf of the buyer. This payment is guaranteed up to a specified amount, within a defined timeframe, and is made between the banks of both parties.

In contrast, an Export Letter of Credit serves the seller. It assures that payment will be received for exported goods. The bank can provide assistance by offering loans or funding to the seller once a Letter of Credit is received.

Key Features:

Assurance: Import and Export letters of credit both have the mutual goal of providing payment assurance.
Facilitation of Transactions: These options facilitate smoother trade transactions, ensuring that businesses can complete their processes swiftly and efficiently.

Here is an example of a use case:

A Singapore-based electronics distributor, ABC Company, imports components from Germany and exports finished products to Indonesia.

For imports, they work with RHB to issue a letter of credit to the German supplier’s bank. This gives the supplier the confidence to release the component parts to ABC Company.

On the export side, they benefit from RHB acting as a negotiating bank—once the Indonesian buyer’s letter of credit is received, ABC Company can access funds even before the buyer makes the final payment.

This dual use of import and export letters of credit allows businesses to manage working capital efficiently and maintain liquidity, serving mutually beneficial outcomes to each party.

Here is an example of a use case:

A Singapore-based electronics distributor, ABC Company, imports components from Germany and exports finished products to Indonesia.

For imports, they work with RHB to issue a letter of credit to the German supplier’s bank. This gives the supplier the confidence to release the component parts to ABC Company.

This dual use of import and export letters of credit allows businesses to manage working capital efficiently and maintain liquidity, serving mutually beneficial outcomes to each party.

2: Letter of Credit (LC) Advising & Confirmation

The Letter of Credit (LC) advising process involves an issuing bank providing an LC to a receiving bank, which then ensures its authenticity without any obligation to honour or negotiate it.

The confirmation process adds a layer of security for exporters. When an LC is confirmed, the confirming bank guarantees payment even if the issuing bank fails to honour the credit. This reduces the risk for exporters, especially in politically or economically unstable regions.

Key Features:

Verification: The role of the advising bank is crucial to verify the authenticity of the LC. This step reassures the exporters about the document's legitimacy and the terms outlined within it. Banks often provide this service to offer peace of mind to their customers.

Here is an example of a use case:

A Singapore-based agri-exporter, XYZ Exports, ships produce to a new buyer in a high-risk market in Central Asia.

The buyer arranges an LC through a local bank unfamiliar to XYZ Exports. To proceed confidently, XYZ Exports requests its bank, RHB, to act as the advising and confirming bank.

RHB, as the advising bank, will verify the LC’s authenticity, while confirmation ensures that XYZ Exports will be paid even if the buyer’s bank defaults. RHB also further enhances security by reviewing the LC against export document terms.

This helps safeguard exporters from risks linked to potential payment delays, ensuring smoother international trade operations and encouraging more substantial and conducive business engagements across borders.

This dual protection allows XYZ Exports to ship without fear of non-payment, securing cash flow, and building trust in new trade relationships.

Here is an example of a use case:

A Singapore-based agri-exporter, XYZ Exports, ships produce to a new buyer in a high-risk market in Central Asia.

The buyer arranges an LC through a local bank unfamiliar to XYZ Exports. To proceed confidently, XYZ Exports requests its bank, RHB, to act as the advising and confirming bank.

This dual protection allows XYZ Exports to ship without fear of non-payment, securing cash flow, and building trust in new trade relationships.

3: Transferrable LC

A Transferable Letter of Credit (LC) is a tool meant for intermediaries or middlemen in international commerce. It allows the initial beneficiary to transfer credit to a second beneficiary, thus reducing disruptions for traders or middlemen.

This feature is ideal for traders who do not supply goods directly but wish to use the buyer's LC to fulfil transactions.

Key Features:

Flexibility: The transferable LC can be passed to different parties, in part or as a whole, simplifying complex transactions.
Efficiency: By eliminating the need for a brand new LC, it reduces administrative burdens and speeds up the exchange of documents and goods.

Here is an example use case:

A trading firm based in Singapore, 123 Global, secures a large order from a European retailer for textiles.

However, 123 Global does not manufacture the textiles themselves—they source them from a producer in Vietnam. Using a transferable LC issued by the European buyer, 123 Global transfers part of the credit to the Vietnamese supplier.

This allows the supplier to ship the goods directly while ensuring they get paid under the same LC terms. 123 Global then coordinates final delivery and retains its margin without handling the goods directly, streamlining the trade while keeping financial risk low.

Here is an example use case:

A trading firm based in Singapore, 123 Global, secures a large order from a European retailer for textiles.

4: Export LC Negotiation

Export LC Negotiation is a tool that enables exporters to receive the value of export documents upon negotiation or the discounting of a letter of credit. This grants them access to funds and improves cash flow.

This process involves submitting export documents to a bank, which then reviews and ensures compliance. Upon verification, the exporter can potentially receive the payment at a discounted rate.

Key Features:

Improved Cash Flow: Exporters can reinvest in their operations without waiting for the full term of the LC to expire. This can be particularly advantageous in industries with long production cycles.
Risk Elimination: As with other LCs, the terms are immutable, meaning that the risk of buyer default is significantly reduced.

Here is an example of a use case:

101 MarineTech, a Singapore-based ship component manufacturer, frequently exports to shipyards in Europe.

Given the industry’s long production lead times, cash flow can be tight. To avoid delays in its production schedule, 101 MarineTech negotiates its export LCs through RHB.

After submitting compliant shipping and customs documents, the bank discounts the LC, allowing 101 MarineTech to receive early payment.

This access to immediate funds enables them to start the next production batch swiftly, improving liquidity and maintaining strong relationships with overseas buyers.

Here is an example of a use case:

101 MarineTech, a Singapore-based ship component manufacturer, frequently exports to shipyards in Europe.

Given the industry’s long production lead times, cash flow can be tight. To avoid delays in its production schedule, 101 MarineTech negotiates its export LCs through RHB.

After submitting compliant shipping and customs documents, the bank discounts the LC, allowing 101 MarineTech to receive early payment.

This access to immediate funds enables them to start the next production batch swiftly, improving liquidity and maintaining strong relationships with overseas buyers.

5: Inward Bill Collection

Inward Bill Collection is a trade finance service that facilitates the process of import trade by managing the incoming documents from sellers. It ensures the smooth handling of documentation for both domestic and international trade transactions.

Key Features:

Agent Role: The bank acts as an agent to manage the collection of inward documents, providing security and efficiency in trade operations. This can occur on sight or at a future date.
Payment Methods: Importers have the option to settle payments either immediately upon presentation of documents or defer payment to a specified future date. This provides flexibility in managing cash flow.

Here is an example of a use case:

XX Hardware, a Singapore-based importer of construction tools, sources materials from manufacturers in South Korea.

To streamline their import process, XX Hardware uses Inward Bill Collection through their RHB.

When the Korean supplier ships the goods, the shipping and commercial documents are sent to RHB. RHB verifies the documents and notifies XX Hardware.

This seamless handling of documents allows importers to receive goods and manage transactions quickly, while also enhancing security by verifying documentation before funds are released.

Here is an example of a use case:

XX Hardware, a Singapore-based importer of construction tools, sources materials from manufacturers in South Korea.

To streamline their import process, XX Hardware uses Inward Bill Collection through their RHB.

When the Korean supplier ships the goods, the shipping and commercial documents are sent to RHB. RHB verifies the documents and notifies XX Hardware.

This seamless handling of documents allows importers to receive goods and manage transactions quickly, while also enhancing security by verifying documentation before funds are released.

6: Outward Bill Collection

Outward Bill Collection is used by RHB to streamline international trade transactions. This option facilitates the seller's ability to receive payments from the buyer via their bank efficiently, which is crucial for exporters seeking to manage financial risks while ensuring the timely receipt of funds.

There are two main types: Documents against Payment (D/P) and Documents against Acceptance (D/A). The former requires the buyer to pay upon receiving the documents, whereas the latter allows for deferred payment. The selling party submits the necessary export documents to their bank, which then advises the importer's bank. Upon the buyer's payment (or acceptance in D/A), funds are then transferred to the exporter.

Key Features:

Document Handling: This service involves the collection and presentation of export documents, which detail the goods and terms agreed upon by both buyer and seller. Proper handling ensures compliance with contractual obligations.
Risk Reduction: By using Outward Bill Collection, exporters can reduce non-payment risks, as it ensures that goods or services are released only after the buyer fulfils payment conditions.

Here is an example of a use case:

XX Hardware, a Singapore-based importer of construction tools, sources materials from manufacturers in South Korea.

To streamline their import process, XX Hardware uses Inward Bill Collection through their RHB.

When the Korean supplier ships the goods, the shipping and commercial documents are sent to RHB. RHB verifies the documents and notifies XX Hardware.

This seamless handling of documents allows importers to receive goods and manage transactions quickly, while also enhancing security due to documentation being verified before funds are released.

Here is an example of a use case:

XX Hardware, a Singapore-based importer of construction tools, sources materials from manufacturers in South Korea.

To streamline their import process, XX Hardware uses Inward Bill Collection through their RHB.

When the Korean supplier ships the goods, the shipping and commercial documents are sent to RHB. RHB verifies the documents and notifies XX Hardware.

This seamless handling of documents allows importers to receive goods and manage transactions quickly, while also enhancing security due to documentation being verified before funds are released.

7: Import/Purchase Invoice Financing

Import/Purchase Invoice Financing is a financial solution allowing businesses to manage cash flow efficiently by paying suppliers upfront while awaiting payment from customers. It supports businesses in maintaining smooth operations without depleting their working capital.

This type of financing serves as a bridge for companies, enabling them to procure goods and services without financial strain. By covering supplier payments, companies can focus their resources on other essential business areas.

Key Features:

Short-term funding: Provides temporary financial relief until customer payments are received.
Supplier payments: Ensures timely payment to suppliers, fostering positive business relationships.
Flexibility: Accessible for both local and international procurements.

Here is an example of a use case:

1001 Office Solutions, a growing business in Singapore, imports ergonomic furniture from Malaysia to supply local offices on a project basis.

With clients on 60-day payment terms, 1001 Office Solutions often faces cash flow pressure when paying suppliers upfront.

Through Import Invoice Financing with RHB, they are able to finance supplier payments immediately upon receiving the invoice. This allows them to maintain production schedules and meet client delivery deadlines without straining working capital. The financing is repaid once their clients settle the invoices, creating a smooth cash cycle and enabling the business to take on more concurrent projects.

This method is particularly beneficial for businesses seeking consistent cash flow to manage daily operations

Here is an example of a use case:

1001 Office Solutions, a growing business in Singapore, imports ergonomic furniture from Malaysia to supply local offices on a project basis.

With clients on 60-day payment terms, 1001 Office Solutions often faces cash flow pressure when paying suppliers upfront.

This method is particularly beneficial for businesses seeking consistent cash flow to manage daily operations

8: Import Shipping Guarantee

By using an Import Shipping Guarantee, businesses provide an indemnity to shipping companies, enabling the release of goods even when the original bill of lading is not yet presented. This endorsement streamlines the process of collecting imported goods, and is widely used by businesses engaged in international trade.

Key Features:

Avoid Demurrage Charges: By presenting a Shipping Guarantee, importers can collect their goods promptly and avoid additional storage fees.
Efficient Cargo Handling: With this guarantee, businesses can manage their supply chain effectively, ensuring that goods are not delayed unnecessarily and can be processed as soon as possible.

Here is an example of a use case:

ABC Components, a Singapore-based importer of electronic parts, regularly brings in shipments from Taiwan for time-sensitive manufacturing orders. On several occasions, shipping documents are delayed due to courier issues, risking demurrage charges at the port.

To avoid disruptions, ABC Components arranges for an Import Shipping Guarantee through RHB. This allows them to collect goods immediately upon arrival, even before the original bill of lading is received.

By doing so, they avoid costly delays, keep production timelines intact, and maintain strong delivery performance for their downstream clients.

Here is an example of a use case:

By doing so, they avoid costly delays, keep production timelines intact, and maintain strong delivery performance for their downstream clients.

9: Trade Discounting

Trade Discounting is a vital tool for businesses looking to manage their cash flow while fulfilling international orders. This type of financing, which allows companies to finance specific transactions tied to their operations, provides the working capital needed to procure raw materials, manufacture products, and prepare shipments for export. By securing the necessary funds in advance, companies can ensure seamless production and delivery processes.

Key Features:

Improved Cash Flow: Exporters can maintain consistent cash flow and avoid disruptions in their operations by obtaining financing at the start of the process. This is essential for growing businesses or those handling large volumes of orders.
Risk Management: Access to capital reduces the risk of financial losses, enabling companies to focus on successfully meeting the demands of their customers.

The process involves three steps: Application, Assessment, and Disbursement. Exporters begin by applying for financing with an institution such as RHB. Next, the lender evaluates their creditworthiness as well as the viability of their order. Lastly, the funds are disbursed, allowing them to produce and ship goods confidently.

Here is an example of a use case:

Helio101 Systems, a Singapore-based solar equipment exporter, receives a large order from a renewable energy firm in Africa.

The order value is substantial, but Helio101 lacks the upfront working capital to buy materials and ramp up production. They apply for Trade Discounting through RHB.

After a quick credit assessment and review of the export contract/invoice, RHB disburses funds to cover production costs. With financing secured, Helio101 meets its manufacturing timeline, ships the solar equipment on schedule, and strengthens its reputation with a new overseas client.

Here is an example of a use case:

Helio101 Systems, a Singapore-based solar equipment exporter, receives a large order from a renewable energy firm in Africa.

The order value is substantial, but Helio101 lacks the upfront working capital to buy materials and ramp up production. They apply for Trade Discounting through RHB.

10: Banker's Guarantee

A Banker's Guarantee serves as a financial assurance provided by a bank to a beneficiary. This guarantee acts as a safety net, reducing the risk for the beneficiary if the principal user fails to meet contractual obligations.

These guarantees are significant in trade finance, where they facilitate trust between parties in a transaction. Common forms include performance guarantees and advance payment guarantees, each catering to specific business needs.

Key Features:

Performance Assurance: Prevents non-performance and ensures that contractual obligations are met.
Security and Risk Mitigation: Provides assurance against potential losses and guarantees payment obligations.

Here is an example of a use case:

Com99 Solutions, a Singapore-based IT infrastructure firm, secures a government contract in the Middle East to install network systems across public facilities.

As part of the agreement, the client requires a performance guarantee to ensure that Com99 delivers according to the contractual terms. Com99 obtains a Banker's Guarantee from RHB, which is submitted to the client as a form of assurance.

This not only secures the project but also strengthens Com99’s credibility in a new and unfamiliar market. In the event of non-performance, the client is protected financially, while Com99 demonstrates its commitment to fulfilling its obligations

Here is an example of a use case:

Com99 Solutions, a Singapore-based IT infrastructure firm, secures a government contract in the Middle East to install network systems across public facilities.

11: Standby Letter of Credit

A Standby Letter of Credit (SBLC) is a tool that serves as a safety net, guaranteeing payment to the beneficiary if the applicant fails to fulfil the contractual agreement. Unlike a regular letter of credit that primarily facilitates payment for goods or services, an SBLC covers non-performance scenarios.

Key Features:

Non-Performance Guarantee: Prevents payment from being denied, even if the applicant fails to fulfil the contractual agreement.

Here is an example of a use case:

ABCInteriors, a Singapore-based design-build firm, signs a multi-phase contract with a property developer in Australia.

Given the size and duration of the project, the developer requests financial assurance in case ABCInteriors is unable to complete the agreed milestones. To provide this security, ABCInteriors arranges an SBLC through RHB. The SBLC assures the developer that they will be compensated if ABCInteriors fails to meet their contractual commitments.

This risk mitigation instrument gives the developer peace of mind while allowing ABCInteriors to establish trust in a new market without tying up excessive cash as collateral.

Here is an example of a use case:

ABCInteriors, a Singapore-based design-build firm, signs a multi-phase contract with a property developer in Australia.

This risk mitigation instrument gives the developer peace of mind while allowing ABCInteriors to establish trust in a new market without tying up excessive cash as collateral.

Embrace the Future of Import and Export Finance with RHB's Trade Finance Products

RHB is shaping the future of trade finance with innovative financial solutions, offering a comprehensive suite of products that enhance efficiency and security. With a focus on flexibility, RHB's various options offer businesses ways to build trust and establish long-lasting partnerships with their own business partners.

To further explore how we can meet your trade financing needs, businesses can reach out to us for detailed assistance. RHB remains committed to supporting the diverse requirements of modern businesses engaged in trade, in order to empower enterprises engaging in Import and Export Finance.

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