Experts on Monday pinpointed challenges like lower capacity of bankers and people concerned in using widely-applied financing mechanism 'factoring'.
To make it more popular, they suggested giving more attention to the capacity-building of stakeholders to gain most of the funding option.
A factor is essentially a funding source that agrees to pay a company the value of an invoice less a discount for commission and fees.
Factoring can help companies improve their short-term cash needs by selling their receivables in return for an injection of cash from the factoring company.
On June 30, the central bank issued a circular allowing the 'factoring' mechanism in Bangladesh.
According to the experts, there is a shortage of skilled manpower at entrepreneurial level also.
The observations and recommendations were made during a webinar at programme styled 'Factoring - international trade finance for Bangladesh' hosted by the International Business Forum of Bangladesh (IBFB).
Dr Mashiur Rahman, PM's adviser on economic affairs, joined the programme as the chief guest while Thomson Lui, regional manager, south and southeast Asia of Factoring Chain International, as the guest of honour.
Dr Prashanto Kumar Banerjee, director (research and consultancy) at the Bangladesh Institute of Bank Management, presented a keynote at the event moderated by IBFB president Humayun Rashid.
Helal Ahmed Chowdhury, former managing director at Pubali Bank, and Syed Mahbubur Rahman, CEO and managing director of Mutual Trust Bank, among others, spoke.
CEO Mr Rahman said the maximum cost for this financing is currently six months' LIBOR plus 3.5 per cent.
This is a real challenge for the import factor to finance within that range, he observed.
To some extent, Mr Rahman said, the financing cost is low as compared to international standards.
Not all buyers will be credit-worthy to the factoring company. Export to small and lower-medium buyers, may not reap the benefits of this circular, he mentioned.
"Training, at this initial stage, is very critical to ensure growth and development of receivable financing business and the biggest challenge for the bank is to select the right import factor for the business."
At the event, Mr Chowdhury said people should be trained in the product at both branch and business level to tap the potential of the new financing tool.
There are huge clothing markets that rely on the factoring and quick adoption will enhance exports, he added.
Mr Chowdhury said foreign direct investment will also attract it as the world is shifting towards factoring instead of letter of credit (LC).
Keynoter Dr Banerjee said one importer from Latin America, who used to procure pharma products from Square Pharmaceuticals, sought such an arrangement.
"That Latin American importer said he would not procure such products once his Bangladeshi counterpart agrees with the factoring."
Dr Banerjee said this is a one-year term arrangement that actually helps boost shipment.
Businesses need to visit banks in each LC but in factoring, they need not do so during the agreement.
"So, businesses can save commission, fees and time with the system," the keynoter stated.
This is an information technology-dependent product. So, skilled manpower both in supply and demand sides are required.
There is also a need for some sort of power for banks to realise money on behalf of exporting nations, Mr Banerjee said.
In international factoring, banks were assigned to realise money from local parties for external exporting entities. Bangladesh needs such a law to strengthen it.
