Some bank credit cards offer revolving credit, but in most cases balances must be paid in full when due by automatic debit from one's bank account. The relationship among trading company, end user and exporter is an important feature of the financing environment in Japan. Thus, U.S. firms dealing with trading companies should familiarize themselves with the financing capabilities of such firms. B. Foreign Exchange Controls Affecting Trading Foreign exchange regulations have almost no impact on normal business transactions. Moreover, a firm's ability to borrow may also be based on its contacts and rapport with bank officials rather than on conventional U.S. standards of credit-worthiness.
Some smaller firms report that they have been forced offshore to secure needed financing.
For U.S. companies with operations in Japan, teaming up with Japanese partners in a joint venture has been one way to receive more favorable treatment from Japanese banks. When a Japanese bank extends credit to a foreign-owned company in Japan, it generally evaluates the financial status of both the borrower and its parent company. As with U.S. domestic transactions, a major factor determining the method of payment is the degree of trust in the buyer's ability and willingness to pay. With the trading company taking on the risk of the transaction, the U.S. firm is protected from the possible bankruptcy of the smaller company. Another frequently-employed payment option is the use of documentary collection or open account with international credit insurance which, unlike the letter of credit, allows the importer's line of credit to remain open.