Importing clothing from overseas—especially from China—can be profitable, but if your payment terms aren’t right, you’re gambling with your cash flow. Whether you're a seasoned distributor or a growing brand owner, structuring the wrong deal can leave you paying too early, overextending credit, or worse—losing your money.
The best payment terms for clothing imports are those that balance risk, trust, and leverage—ensuring both you and your factory can operate with confidence. From deposits to D/P and net terms, the structure you choose impacts pricing, delivery, and security.
At Fumao Clothing, we’ve negotiated payment structures with over 100 international clients. In this article, I’ll share what really works, what to avoid, and how to structure terms that support your business growth.
What Payment Methods Are Common in Garment Imports?
In global garment trade, the payment method often sets the tone for the entire supplier relationship. As a buyer, you must understand each method’s pros and cons—especially when dealing with high-volume orders or new factories.
The most common payment methods include T/T (wire transfer), L/C (letter of credit), D/P (documents against payment), and secure platforms like PayPal or Alibaba Trade Assurance.
What Are the Pros and Cons of Telegraphic Transfer (T/T)?
T/T is the most widely used method. It typically follows a 30/70 or 50/50 rule: a 30–50% deposit before production, with the balance after shipment. This works well with trusted suppliers and fast-moving goods.
However, T/T is risky if you're dealing with a new vendor. You may send a deposit and never receive product or receive poor quality. To reduce risk, consider starting with a small batch and request third-party inspection before balance payment.
Also, always confirm your supplier’s banking credentials to avoid fraud or phishing invoice scams.
Is a Letter of Credit (L/C) Worth It?
An L/C offers more security, especially for orders over $20,000. The bank holds your funds and only releases them once the supplier meets agreed conditions like shipping documents and quality certifications.
Downsides? It’s slower, more expensive (bank fees apply), and often rejected by small factories due to red tape. At Fumao, we accept L/C for orders above $30,000 but still prefer T/T for speed and flexibility.
What Are the Best Terms for First-Time Orders?
When working with a supplier for the first time, it’s crucial to mitigate risk while showing you're a serious buyer. Factories won’t start production without some upfront commitment—but that doesn’t mean you need to pay everything early.
The safest payment structure for first-time orders is a low deposit (20–30%) combined with production milestones and balance after inspection.
What Should a Good Trial Order Payment Term Look Like?
Let’s say you’re placing a $10,000 order. A reasonable term would be:
- 30% deposit after sample approval
- 70% balance after final inspection, before shipment
To protect yourself, hire a third-party QC service like Intertek or SGS to inspect the goods and report to you before releasing the balance. This gives you leverage without delaying delivery.
Can You Use Alibaba Trade Assurance for Extra Security?
Yes, and many newer buyers do. Alibaba Trade Assurance holds your funds in escrow and protects you against delays or quality issues. But note—it only works with suppliers on the platform and often adds fees.
Some of our buyers combine Trade Assurance for the first order and move to T/T or L/C once trust is built.
How Do Net Payment Terms Like 30/60 Days Work?
Net terms (like 30/60/90 days) mean you receive the goods first and pay later. It’s great for cash flow, but not every supplier offers it—especially for small brands.
Buyers with strong volume and long-term relationships can negotiate net terms such as 30% deposit, 70% due 30 days after arrival, or even full payment on net 60 basis.
When Can You Ask For Net Payment Terms?
Typically, suppliers only offer net terms if:
- You’ve worked together for 2+ orders
- You have a company in good financial standing
- The total value exceeds $30,000 per shipment
- You agree to sign a legal payment agreement or provide a guarantee
At Fumao, we extend Net 30 terms to long-term clients with solid track records, especially for repeat seasonal orders.
What Are the Risks for the Factory?
For the factory, delayed payment increases financial pressure—especially during peak season. That’s why many factories add 2–5% to the unit price for Net 30 or Net 60 deals.
If you’re offered terms without cost increase, check if hidden costs are being added elsewhere, like packaging or shipping. Always clarify the full landed cost of your order.
Can You Negotiate Better Terms As You Scale?
Yes—and you should. As your order volume grows and your reliability increases, factories are more willing to adjust terms to secure your business. Payment terms are not fixed—they evolve.
Negotiating better terms is about building trust, communicating clearly, and showing consistent growth over time.
How Should You Ask For Better Payment Terms?
Timing matters. Don’t ask for Net 60 right after your first order. Wait until you’ve placed 2–3 orders without issues. Then send a structured request:
- State your average order value
- Show your payment history
- Explain why Net 30/60 will help you scale
- Offer trade-offs like bigger volume or faster reorders
Factories respect honest, professional negotiation—especially when you provide a forecasted PO plan showing your intent to grow.
Are There Alternatives to Full Payment Flexibility?
Yes. Instead of long net terms, ask for these:
- Split balance into two parts (e.g., 35% at inspection, 35% after delivery)
- Ask for 45-day terms during slow seasons
- Use trade finance from services like Drip Capital or Bluevine to fund orders upfront and pay factories fast
These hybrid solutions help you scale without squeezing your factory partners.
Conclusion
The right payment terms protect your cash, build trust, and fuel growth. Whether you start with 30/70 T/T, experiment with Alibaba Trade Assurance, or work toward Net 30 terms, your payment strategy should evolve as your supplier relationship grows.
At Fumao Clothing, we offer flexible payment terms tailored to the buyer’s experience, order volume, and shipping preferences. We want you to scale confidently while ensuring production moves smoothly. If you're looking for a manufacturer who understands payment flexibility and international risk, contact our Business Director Elaine at elaine@fumaoclothing.com today.
