Exporters to get faster payments as BB to allow global invoice discounting
Deferred payments remain one of the toughest challenges in global trade
Highlights:
- Bangladesh Bank will let exporters use global platforms for faster invoice payments.
- Exporters get cash upfront as financiers buy their invoices.
- Local banks will join, with discount rates capped around 8%.
- The system helps maintain production and reduce high-interest loans.
- Risks include dependence on foreign financiers and documentation issues.
- Experts say it boosts competitiveness for small and medium exporters.
Bangladeshi exporters will soon be able to avoid waiting three to four months for foreign buyers to settle invoices as the central bank prepares to allow them to use global trade finance discounting platforms for faster payments.
These digital platforms allow exporters to upload invoices accepted by foreign buyers. After verifying the buyer's creditworthiness, banks and financiers worldwide can bid to purchase the invoices. Exporters then receive cash upfront – slightly less than the invoice value – instead of waiting for months.
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A senior Bangladesh Bank official, speaking on condition of anonymity, said deferred payments remain one of the toughest challenges in global trade.
"Many buyers use their reputation to delay payments for up to 120 days. During this time, exporters struggle to maintain production, take fresh orders, or pay staff," the official said.
While some local banks already provide financing against export bills, the official noted that access is limited. "For years, exporters have demanded a better solution, and this platform addresses that demand."
He added that local banks will also be integrated into the system. "A circular will be issued soon. The maximum discount rate will be capped at SOFR + 4 or around 8%, so no exporter pays more."
Mohammad Abdur Razzak, chairman of Research and Policy Integration for Development (RAPID), welcomed the initiative as a facilitation measure. "Bangladesh's trade finance mechanism is gaining a new channel, increasing transparency and efficiency for exporters," he said.
Razzak, however, cautioned that it may take time to become fully effective and should benefit sectors beyond garments.
How the platforms work
Trade finance discounting is a digital system where exporters sell their receivables to financial institutions in exchange for early cash. Exporters upload invoices issued by buyers onto the platform, which automatically verifies the buyer's credit rating or checks it via the buyer's bank.
Based on the buyer's rating, multiple financiers – including banks, non-bank financial institutions, or investors – offer financing proposals. The exporter receives slightly less than the invoice value in advance.
"Being able to discount an invoice and receive foreign currency within two or three days is a significant advantage,"Mohammad Hatem, president, BKMEA
For example, a $100,000 invoice may yield $97,000 upfront, depending on the buyer's rating and the remaining days to maturity. When the buyer pays in full on the due date, the financier recovers the advance.
This mechanism ensures exporters receive immediate funds without taking additional bank loans, while the financier assumes the foreign buyer's credit risk. It also allows production continuity and faster order fulfilment.
Some notable global trade finance discounting platforms include Marco Polo Network, Komgo, Contour, TradeLens, Bolero, EssDOCS, Incomlend, TFX, we.trade, TReDS, and dltedgers.
Current financing gaps
A senior Sonali Bank official said local banks already provide pre-shipment and back-to-back financing covering about 90% of export bills. However, post-shipment financing is often insufficient.
"Banks can only provide up to eight working days of free credit on cash export orders. Deferred LCs are charged at commercial rates, currently 13.25% at Sonali Bank," he said.
The banker noted that integration with global platforms is vital as domestic banks may not always have foreign currency on hand.
Globally, the International Chamber of Commerce estimates trade finance demand at nearly $5 trillion, with small and medium enterprises being the most underserved. In Bangladesh, HSBC and Prime Bank already offer invoice discounting and receivables financing on a limited scale.
In FY25, Bangladesh exported $48.28 billion worth of goods – mainly garments, followed by leather, frozen foods, and jute products. Over half of these exports were on deferred payment terms.
Benefits and risks
Experts said that joining a global online trade finance discounting platform will allow exporters to access cash quickly, enabling them to take new orders and increase production.
Businesses that face difficulties obtaining bank loans – especially small and medium exporters – will find it easier to secure financing through the platform. It may also offer more competitive discount rates compared with local banks. Additionally, exporters will not have to bear the credit risk of foreign buyers.
However, experts also cautioned that there are some risks. Reliance on foreign financiers will increase. If domestic banks do not actively participate, exporters may become overly dependent on international investors, making it harder to benefit from the system.
Exporters must also upload invoices, provide accurate documentation, and ensure correct buyer information. Weak record-keeping could prevent many small and medium enterprises from accessing the platforms.
Furthermore, foreign currency inflows could be affected, so Bangladesh Bank must ensure that the system does not place undue pressure on currency management, said experts.
What businesses say
Mahmud Hasan Khan, president of the BGMEA, said deferred payments have become the norm, rising from 21 days to as much as 105 days in recent years.
"Exporters must pay for back-to-back LCs in advance, often without having received payments from buyers. Invoice discounting has therefore become essential," he said.
He further said joining a global discounting platform would provide additional benefits. "However, the advantage depends largely on the credit ratings of Bangladeshi products' buyers. Without competitive discount rates, being on the platform may not be profitable."
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), called the development a very positive initiative.
Under current local bank policies, only some exporters can access financing against export bills, making such facilities essential, he told The Business Standard.
He said many buyers demand 60-90-day deferred payments, forcing exporters to take loans at high interest. "When LC payments are due, banks don't provide loans to all and may charge up to 15%."
Hatem added, "In such cases, being able to discount an invoice and receive foreign currency within two or three days is a significant advantage."
Syed Nasim Manzur, managing director of Apex Footwear, told TBS that this is a very positive and necessary initiative, and it should have been introduced earlier.
"Many buyers, including those from the US and other countries, purchase goods on the condition that payment is made 30 to 90 days after the products reach their ports or warehouses. If exporters refuse these terms, buyers turn to other countries or suppliers. As a result, exporters must accept deferred payment conditions," he said.
He added, "In such a scenario, international digital platforms offering invoice discounting will enhance the competitiveness of the export sector. Payment terms are a crucial factor for exporters' capacity. However, the central bank must ensure that the cost of discounting does not become excessive."
Mohammad A (Rumee) Ali, former deputy governor of Bangladesh Bank, said the platforms will provide Bangladeshi exporters access to larger markets, which will also create competition within the domestic market. "However, monitoring by Bangladesh Bank will be essential," he added.
