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Introduction of Credit Management for Overseas Trade

36 Things You Need to Know About Credit Management for Overseas Trade

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2. Difference in the Concepts of Collateral

In Japan, collateral is almost equivalent to real estate. In the collateral of a bank loan, this trend is particularly remarkable. Accordingly, in credit management, it is essential to check the real estate register.


Recently, while loans against property and debt collateral have started gaining momentum in Japan, it’s been still quite confined to government-led banks trying to support SMEs. Obviously, the more stocks and equipment can be used as collaterals against loans, fund-raising would become easier for SMEs.


On the other hand, collateral is not necessarily real estate in oversea. Rather, they are mainly properties and debts. This is largely due to differences in culture and business practices.


In Japan, the myth that there is no depreciation to real estate still persists. In fact, in recent years except for some areas, the value of the real estate has decreased, but many Japanese still think that the value of real estates is high.


However, such real estate myths do not necessarily exist overseas. In countries such as the United States with the territory, the value of the real estate does not always increase. In addition to that, there are overwhelmingly many rental groups because there is no hesitation to move the residence.


Certainly, in some Asian countries, especially in places where the land is narrow as in Japan, there are also countries with a focus on real estate collateral. However, in other countries, real estate values and markets are often less defined than in Japan. Instead, debts are mainly accounts receivable, and it is considered to be easy to manage and high in value because it will be cash if collected reliably. A system for managing accounts receivable has also been developed.


In addition, there is a second-hand market and a resale market for properties, so the value of properties can be easily calculated. Even in Japan, in the used car market it can be easily calculated manually. In overseas, this situation is true not only for cars but also for other properties.


Under these circumstances, collateral among corporate transactions in foreign countries is mainly properties and debts.

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【PDF】Introduction of Credit Management for Overseas Trade

Introduction of Credit Management for Overseas Trade

36 Things You Need to Know About Credit Management for Overseas Trade

This ebook was created as a resource for those who have trouble with diverse trading or want to learn Credit Management in a rational.


Chapter (Excerpt)

  • Major Differences Between International and Domestic Transactions 
  • Trade Reference
  • Bank Reference
  • Collection Agency
  • Reasons Behind Difficulty in Recovering Delayed Debts
  • Mistakes in International Transactions Where Japanese Companies are Prone to Fail
  • Customer Analysis ~ 5 C's of Credit
  • Dangerous Signs
  • Five Principles of Debt Collection