sourcing · 5 min read
Payment terms for fabric orders: T/T, L/C and escrow
Payment terms are the real contract. A price is only meaningful next to the terms attached to it — the same fabric at 30% deposit and at 100% upfront are different offers.
By Weft Bridge · Reviewed by our Guangzhou sourcing team · Updated 2026-11
The options
| Method | Protects | Cost | When to use |
|---|---|---|---|
| T/T 30/70 | Shared risk | Bank fees | Standard for repeat orders |
| L/C at sight | Buyer and seller | 0.5–1.5% of value | Large first orders |
| Escrow / platform | Buyer | 1–3% | Small first orders |
| 100% upfront | Seller | None | Avoid on a first order |
What the deposit is for
The 30% deposit buys yarn and books the dye line. It is not a guarantee of quality — it is a commitment that lets the mill schedule production.
The 70% balance is usually against documents, which means you pay before you see the goods. That is exactly why inspection before shipment matters more than the payment terms.
Negotiating levers
- A larger deposit can buy a better price, but only if you trust the supplier.
- Paying the balance against a passed inspection report is worth asking for on a first order.
- Partial shipment terms matter if the order is large and you need stock early.
- Currency: quoting in RMB or USD shifts the exchange risk to one side.
FAQ
Is a letter of credit worth it?
For a first order above roughly $50,000, usually yes. Below that, the bank fees outweigh the protection.
Can I hold back a retention?
Some buyers hold 5–10% against the next order. It is negotiable, and worth asking for after a good first delivery.