The working capital solution allows the companies to finance and increase the production volume of their goods that are in demand
According to a press release issued recently by Incomlend, they developed the program for two Dhaka-based companies - Fashion Tex Asia Ltd, apparel buying house, and Sadat Apparels Ltd, a garment manufacturer.
Both companies supply apparel products in the United States, Europe and South America.
The working capital solution allows the companies to finance and increase the production volume of their sweaters and stock up on garments that are both in season and demand.
Previously, Fashion Tex Asia and Sadat Apparels used to take up to 120 days to cash in an invoice.
However, the extended credit terms can potentially impair cash flow and impede their ability to boost their manufacturing output and source merchandise to meet demand upticks.
The turnaround facility provided by Incomlend enables Sadat Apparels and Fashion Tex Asia to cash in an invoice as early as three days after its goods are shipped to the buyer, said the press release.
The companies now have the working capital to cover their operational expenses and meet new orders coming from the US.
The Invoice Financing Programme also offers Sadat Apparels Ltd and Fashion Tex Asia Ltd the financial agility to pursue new growth opportunities as the appetite for garments from Bangladesh continues to soar globally.
Incomlend is founded in Singapore and with offices in Europe, India, and Southeast Asia. It connects small and medium enterprises (SMEs), like Fashion Tex Asia Ltd and Sadat Apparels Ltd, globally with communities of investors, enabling them to buy and sell individual invoices in an invoice exchange platform.
In a statement, Rezaul Karim Jahid, managing director of FashionTex Asia Ltd and Sadat Apparels Ltd, said that with Incomlend Invoice Financing Program, they can concurrently retain their customer by offering competitive payment terms and free up their working capital.
“We now have access to a steady cash flow to pump back into the production cycle and increase turnover and profit, contributing significantly to our business growth. We look forward to working with Incomlend for the long-term,” he added.
Morgan Terigi, co-founder and CEO of Incomlend said that Bangladesh is home of many apparel manufacturing SMEs and is an emerging export powerhouse in South Asia.
As a company with a proven experience in the garment industry, Incomlend strongly supports these SMEs in capitalizing on positive market conditions with our quick turnaround financing facility, he added.
He also said that they are enabling manufacturers like Sadat Apparels and buying houses like Fashion Tex Asia to scale their business and expand their footprint overseas by providing them with competitive and alternative non-recourse working capital solutions.
Talking to Dhaka Tribune, Fazlee Shamim Ehsan, vice-president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said that invoice financing program is a viable solution.
“But buyers usually want to make big deals through invoice financing like $2-3 million. In this case, small exporters cannot take advantage, because an exporter has a maximum payment of $400,000-500,000 with a single buyer,” he added.
He also said that an exporter would not be able to enjoy it unless its annual business with a single buyer exceeded $1 million though this opportunity was needed more for the small exporters, the big ones have many benefits including EDF, low-cost fund forcing etc.
Invoice financing a system to secure exporters’ investments. As an intermediary company, the service provider pays to suppliers on behalf of the importer after getting an invoice, he also said.
However, some exporters said that they have such a procedure with buyer-nominated invoice financing programs and these are an easy way to get payments.
Almost all reputed and large brands and buyers had such arrangements to ensure that their suppliers had working capital to continue production, they added.