Tradewind provided a $500,000 credit facility for a ready-made garment exporter based in Bangladesh. The company sells to several renowned buyers in Europe, including Primark, and in the U.S. and is using the facility to support increasing sales on open account payment terms to its existing and future customers.
Before seeking out Tradewind’s financing, the garment exporter was accustomed to receiving payment through letter of credit or sight TT, but this pattern was broken when one of its buyers requested payment on an open account. The company faced difficulty accepting these new terms because they did not align with the requirements of its bank or of the company itself as it needed additional security and liquidity to operate. To solve the cash shortfall, Tradewind provided funding that allowed its client to transact on 45-day open account terms, which minimized the gap between the buyer’s requirement and the company’s requirement. It also provided credit protection by acting as an intermediary between its client and the buyer, covering the risk of non-payment.
The buyer also benefitted from the arrangement as it helped them to optimize their supply chain. Going forward, the client can now better cater to the shift that it is seeing with some of its European buyers from letter of credit to open account and offer extended terms to tier 1 retailers on a global level.
“Tradewind recognizes that most large international buyers in today’s marketplace are conducting trade through open account terms. With a presence in Bangladesh and vast experience financing textile and apparel exporters there, our client found our international capabilities, flexible solutions and ability to scale funding with sales growth to be the right match for its financing needs. As always, we are happy to service a client like this who is a mainstay of the Bangladeshi economy,” said Soheil Zali, country manager of Tradewind Bangladesh.
