Bangladeshi garment exporters: getting paid by European and US buyers on time

Bangladesh is one of the world's largest garment exporters, selling mainly to Europe and the US. Factories finance raw materials, labour and freight long before the buyer pays. Payment terms, documents and Bangladesh Bank's realisation rules decide how long the factory waits.

William Sunjo M.Operations and compliance editor

Published: 14 October 2026
Reading time: 2 min read

A Gazipur knitwear factory ships $486,000 of sweaters to a Hamburg retailer under an export letter of credit. Before the ship sailed, the factory had already imported yarn under back-to-back LCs, paid 1,800 workers for two months and paid for trucking to Chittagong. The buyer pays 90 days after shipment, if the documents are clean.

How garment exports get paid

Bangladesh's ready-made garment sector sells mainly to European, British and US buyers. Payment usually comes through:

export letters of credit, where the buyer's bank undertakes to pay against compliant documents,
sales contracts, with payment on agreed terms after shipment,
deferred terms, from 30 to 120 days after shipment.

Back-to-back LCs

Factories finance fabric, yarn and accessories by opening back-to-back LCs with their suppliers, secured against the buyer's export LC. When the buyer pays late, the factory struggles to pay its own LCs, and the problem cascades.

Documents are payment

Banks pay LCs against documents, not goods. Discrepancies, such as a wrong date, a description that does not match, or a missing certificate, let banks refuse or delay. Experienced commercial teams check every document against the LC before presentation. The ICC's rules for documentary credits govern most LCs.

Realisation rules

Bangladesh Bank requires export proceeds to be realised within a set period. Banks track each shipment's proceeds and report overdue ones, and exporters must explain delays. Keep a receivables schedule per buyer and shipment.

Buyers who pay well

Garment buyers differ. Some pay on time under clean LCs; some stretch terms and raise discrepancies. Track each buyer's payment history and adjust terms, insurance or LC confirmation accordingly.

Paying into Bangladesh: the local rail

What	Detail
Local rail	BEFTN for batch transfers; NPSB for instant interbank transfers
Run by	Bangladesh Bank
Settlement	BEFTN credits the same or next business day; NPSB in seconds

Source: Bangladesh Bank: payment systems. Checked when this guide was last updated; the scheme's own page has the current figures.

Where Rivet fits

Rivet is not a bank and does not issue or confirm letters of credit. Bangladesh-registered exporters receive proceeds through Bangladeshi banks under Bangladesh Bank rules. Where available, Rivet's payouts can deliver payments in taka to Bangladeshi bank accounts from partners abroad who bank with Rivet. Regulated partner institutions hold Rivet customers' funds.

See letter of credit explained.

Questions people ask

How do garment buyers usually pay Bangladeshi factories?

Through export letters of credit or sales contracts, frequently with deferred payment after shipment.

What is a back-to-back LC?

A letter of credit opened by the factory's bank in favour of its fabric or accessories supplier, backed by the buyer's export LC.

Why do LC payments get delayed?

Discrepancies in documents, such as dates, descriptions or quantities that do not match the LC, let banks refuse or delay payment.

What happens if a buyer pays late?

Overdue export proceeds are reported by banks, and exporters must explain them. Late payment also delays repayment of back-to-back LCs.

Sources

Written by

William Sunjo M.

Operations and compliance editor

William covers what happens once a company starts moving money: getting the business verified, paying contractors and suppliers abroad, and keeping card spend under control. William writes for the founder or finance lead who has to make it work this week, and links every rule cited to the text it comes from.