The safest payment terms for a textile order tie each release of money to a milestone you can verify, such as an inspection pass or a copy of the bill of lading, and avoid paying the full amount before the goods exist. A modest advance to cover fabric, with the balance paid against a passed final inspection and shipping documents, protects both sides and is widely accepted by Indian textile exporters. Full prepayment removes every lever you have once production starts. Open account with a new supplier sounds attractive but exposes the supplier to risk it will price in, and it does not help you if the goods are wrong.
Structures that protect the buyer
- Advance plus balance against evidence: an advance of typically 20 to 30 percent on order confirmation, with the balance due only after a passed final random inspection and a copy of the bill of lading or a forwarder's cargo receipt.
- Letter of credit with an inspection certificate: an irrevocable letter of credit under UCP 600 that lists a third-party inspection certificate among the required documents, so the bank cannot pay unless the goods have been checked.
- Documents against payment: the supplier ships and you pay through the banks to receive the original bill of lading, which works for repeat suppliers but gives no control over quality before shipment unless paired with inspection.
- Staged payments for large programmes: fabric, production and shipment milestones, each released against a report or document, which spreads the risk across the order rather than loading it at the start.
- Escrow-style arrangements through a bank or a trusted intermediary, where funds are lodged and released on agreed proof, useful for a first order with an unknown supplier.
Tie payment to inspection, not promises
The single most effective protection is making the balance payment conditional on a passed inspection report from an inspector who works for you. Write the condition into the purchase order and the proforma invoice so that it is contractual rather than a courtesy. If the inspection fails, the balance waits until the rework has been re-inspected. A supplier who refuses this condition for a first order is telling you something.
Under a letter of credit, the same effect comes from naming the inspection certificate as a required document, with the issuer and wording defined precisely so that the bank can check it. Be careful with discrepancies. A letter of credit with too many conditions invites small documentary errors that give the supplier grounds to renegotiate, so keep the required documents to those that matter.
What to refuse
Refuse full prepayment, even with a discount attached. Refuse payment to a personal account or to a company name that differs from the one on your contract and the supplier's importer-exporter code. Refuse to release the balance on the basis of the supplier's own photographs or self-inspection. Refuse to pay against a bill of lading copy you cannot verify with the shipping line or forwarder. Treat any request to change bank details by email as fraud until confirmed by a phone call to a known number.
How we handle it
At Creston & Co we structure payment terms around evidence you can see, and we provide that evidence: inline and final inspections with photographed reports, loading supervision with seal photographs, and copies of the shipping documents as they are issued. We help with the paperwork behind letters of credit and milestone payments so the conditions are clear to both sides. If you want a second opinion on terms a supplier has proposed, we offer a free 20-minute sourcing review.