Payment Terms Explained

Payment terms are where most first orders go wrong — not because either side is acting badly, but because the expectations were never stated clearly. Here is how we work, and why.

What we usually start with

For a first order, our default is 30% deposit with the balance against the bill of lading copy. This is a common arrangement in Chinese home textile export and it balances the risk reasonably: the deposit covers materials, and the balance is released when you have evidence the goods have shipped.

We will consider alternatives depending on order size and whether there is an established relationship. What we will not do is ship a first container on open account terms — that risk is not one a company of our size can carry.

The terms that exist, and what they mean

• T/T 30/70. Deposit by telegraphic transfer, balance before or against B/L copy. The most common arrangement.
• L/C at sight. A letter of credit through your bank, payable on presentation of documents. Adds bank fees and paperwork but suits larger orders and buyers who need bank intermediation.
• D/P or D/A. Documents through the bank, payment on presentation (D/P) or after a period (D/A). Occasionally used once a relationship is established.
• Open account. Goods ship and you pay on agreed terms. Only viable with established buyers.

The part buyers underestimate

Payment timing interacts with production scheduling more than most buyers realise. A deposit arriving a week later moves the order a week later, and if that pushes you past a shipping cut-off, you are waiting a further week for the next sailing.

On a fast-turnaround order near a seasonal peak, that can be the difference between goods on shelf before Ramadan and goods arriving after it.

What we will put in writing

• The exact deposit percentage and when it is due.
• What document triggers the balance payment.
• Production lead time from deposit receipt, not from order date.
• What happens if the shipping schedule changes.

We would rather agree these on the first order than discover a mismatch on the third. If your standard terms differ from ours, tell us early — it is usually workable, but it needs to be agreed before production starts, not after.