Serai Limited, a digital B2B platform of HSBC, has launched several solutions to help RMG manufacturers, suppliers and buyers on its platform identify, monitor and mitigate risks associated with trade.
Serai enables Bangladeshi apparel suppliers and manufacturers to connect with buyers and brands worldwide. In partnership with Euler Hermes, Coface and Dun & Bradstreet, leading experts in trade credit insurance and data analytics, companies on Serai’s platform can now access information to help them assess the financial health and creditworthiness of their buyers or suppliers.
These insights can help companies monitor their counterparties and identify risks early on, potentially saving their business time and costs in the long run.
“Even before COVID-19, the apparel industry was faced with challenges - from the changing policies on trade tariffs, increasing pressure on supplier payment terms, and an increased demand for supply chain transparency with regards to sustainable materials and practices. COVID-19 just accelerated and amplified some of these challenges. Order cancellations, reduced order volumes, extended payment terms and shipping delays left many in the industry in a situation of financial uncertainty,” said Vivek Ramachandran, CEO of Serai.
According to a report from Better Buying, only 17% of suppliers could confirm they have some form of insurance that guarantees payment for orders in the event that customers default on their contractual obligations. Most suppliers (57.4%) do not have such insurance.
With RMG being the main export sector in Bangladesh, it is especially important that suppliers protect themselves from potential loss of revenue due to order cancellations.
The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) members alone reported US$3bn loss with all its orders until July being cancelled or suspended; whereas BGMEA (Bangladesh Garment Manufacturers and Exporters Association) said some 1,048 member factories had reported that orders for over 900 million garments had been cancelled or held up.