How the money moves
The sector runs on letters of credit. A factory funds its fabric and trims through a back-to-back LC opened against the buyer’s own LC. The buyer’s instrument is the collateral for the factory’s raw materials. Offer a transfer instead and you have not simplified the deal, you have removed the thing the factory borrows against.
What catches people out
The timing runs in opposite directions on the two sides. Exporters are commonly paid within days of shipment under an at-sight LC, while their own local suppliers sit on back-to-back terms stretching 90 to 120 days. A Hong Kong buyer arriving with milestone payouts is proposing something the factory’s balance sheet has never been shaped around, and the conversation has to start there.
What a Bangladesh seller will expect
Order sizes in Bangladeshi RMG are large and margins are thin, so the negotiation is rarely about price per unit. It is about who carries the fabric cost and for how long. Milestone payouts are genuinely attractive here if the first tranche funds materials, and genuinely unattractive if it does not.
Evidence that works here
Buyers check factory compliance status alongside the goods themselves: building and fire safety certification is a condition of sourcing for most Western brands, and it lapses. Treating a current compliance certificate as evidence for an early tranche puts the check where it belongs: before production, not after shipment.
How Tranchio handles this corridor
The buyer commits the full order value once, in HKD; funding goes live with a licensed provider at launch.
Tranches are agreed up front, each with the document that releases it.
The seller or an inspector uploads evidence; every file is hashed on receipt.
The buyer approves, and only that tranche is cleared to pay. The rest stays gated.