The most common terms for Morbi tile orders are an advance, often around 30%, with the balance paid against a copy of the bill of lading. For a new relationship, many buyers use a letter of credit at sight instead.
Whatever the terms, avoid paying 100% in advance to a supplier you have not verified. That single rule prevents most of the worst outcomes.
The main options
- Advance plus balance against copy of the bill of lading: you pay a deposit to start production, and the rest once the goods are loaded and the factory sends you a scan of the bill of lading.
- Letter of credit (LC) at sight: your bank promises to pay the exporter once it presents documents that match the LC exactly.
- Documents against payment (D/P, sometimes called cash against documents): the exporter's bank releases the original documents to you only when you pay.
- Open account or deferred payment: you pay after arrival or on credit, which factories offer only to established buyers with a track record.
How advance and balance works in practice
The advance books line time and pays for raw materials and fuel. Most factories will not start a made-to-order run without it. That is reasonable, because a container of your design is hard to sell to anyone else.
The balance falls due once the container is loaded and the bill of lading is issued. You check the copy, pay, and the exporter releases the original bill or arranges a telex release so you can collect the goods.
The risk for you sits between the advance and loading. If the factory delays, swaps grades or ships the wrong shade, you have already paid the deposit. That is why a pre-shipment inspection before you pay the balance matters. Make the balance conditional on an inspection report you accept.
When a letter of credit makes sense
An LC protects both sides when you do not yet trust each other. The factory knows a bank will pay. You know the bank will pay only against the documents you specified.
Write the LC carefully. Include the inspection certificate as a required document, so the bank will not pay without it. List the exact product description, quantity, grade, latest shipment date and Incoterm. Our guide to FOB, CIF or DAP explains how the Incoterm changes who pays freight and insurance.
LCs carry bank charges on both sides and are strict on paperwork. A small spelling difference can delay payment. Ask your bank for its LC checklist before you open one.
Protect yourself whatever the terms
- Pay only to a bank account in the exporter's own company name, and confirm it matches the name on the proforma invoice.
- Confirm any change of bank details by phone with a person you know, because changed details by email are a common fraud.
- Put grade, shade, calibre, quantity and loading date in the proforma invoice, so the terms you pay against are written down.
- Check that the exporter has a valid IEC and GST registration, which shows it is a real exporting business.
- Note that quotes often carry a validity period and may be revised if fuel prices move, so pay the advance within that validity.
How we help
We verify the exporter and its bank details, check the proforma invoice line by line, inspect before you release the balance and check the documents against the LC or the order. See how it works for the full sequence, or book a free sourcing review to set up terms for your first order.