payment terms clothing manufacturing<\/strong> industry has settled on looks like this:<\/p>\n\n\n\nStandard Payment Flow:This structure evolved because it kind of works for everyone:<\/p>\n\n\n\n
For the factory:<\/strong><\/p>\n\n\n\n\nGets enough upfront to buy materials without risking their own cash<\/li>\n\n\n\n Knows you’re serious (you’ve committed real money)<\/li>\n\n\n\n Gets the bulk of payment once work is done<\/li>\n<\/ul>\n\n\n\nFor you:<\/strong><\/p>\n\n\n\n\nDon’t have to send everything upfront<\/li>\n\n\n\n Can verify quality before sending the big payment<\/li>\n\n\n\n Have some leverage if there are problems<\/li>\n<\/ul>\n\n\n\nIs it perfect? No. But it’s survived as the industry standard because it balances the risks reasonably.<\/p>\n\n\n\n
The 30\/70 TT Structure Everyone Uses<\/h2>\n\n\n\n Let me walk you through how this actually works in real life, using my most recent order as an example.<\/p>\n\n\n\n
My Last Order: How It Actually Went Down<\/h3>\n\n\n\n The Setup:<\/strong><\/p>\n\n\n\n\nProduct: 600 custom sweatshirts<\/li>\n\n\n\n Factory: I’d worked with them once before successfully<\/li>\n\n\n\n Total cost: $7,200<\/li>\n\n\n\n Payment terms clothing manufacturing<\/strong> agreement: 30% deposit, 70% balance before shipping, TT payment<\/li>\n<\/ul>\n\n\n\nWeek 1: The Deposit<\/strong><\/p>\n\n\n\nGot the final quote and order confirmation. Factory sent me their bank details. This is where I almost messed up\u2014the email looked legit, but I’d read about scams where hackers intercept emails and change bank details.<\/p>\n\n\n\n
So I did what I now do every time: Called them. Used a phone number I already had from previous order, not one from the email. Read back the bank account details character by character.<\/p>\n\n\n\n
Factory contact:<\/strong> “Yes, that’s correct. ICBC Bank, account ending in 4567.”<\/p>\n\n\n\nThen I sent the deposit: $2,160 (30%).<\/p>\n\n\n\n
Reality check:<\/strong> My bank charged 25. So factory actually received 70 to make up the difference because they needed the exact amount.<\/p>\n\n\n\nLesson learned:<\/strong> Now I always send an extra $50-75 to cover intermediary bank fees.<\/p>\n\n\n\nWeek 2-4: The Waiting Game<\/strong><\/p>\n\n\n\nThis is the scary part. You’ve sent money. Now you wait and hope they’re actually making your stuff.<\/p>\n\n\n\n
I’ve learned to be proactive:<\/p>\n\n\n\n
\nWeek 1 after deposit: Asked for confirmation they received payment (they sent bank receipt)<\/li>\n\n\n\n Week 2: Asked for photos of materials (they sent pics of fabric rolls)<\/li>\n\n\n\n Week 3: Asked for production start confirmation (they sent photos of cutting)<\/li>\n\n\n\n Week 4: Asked for production progress (they sent photos of partially completed sweatshirts)<\/li>\n<\/ul>\n\n\n\nAm I annoying? Maybe. But I’m not sitting in the dark wondering if my $2,160 just vanished.<\/p>\n\n\n\n
Week 5: Pre-Shipment Inspection<\/strong><\/p>\n\n\n\nFactory said production was complete. This is the critical moment before you send the big 70% payment.<\/p>\n\n\n\n
Options here:<\/p>\n\n\n\n
\nTrust their photos (risky)<\/li>\n\n\n\n Ask them to send a sample unit by express (costs $40-60, takes 3-5 days)<\/li>\n\n\n\n Hire third-party inspection service (costs $200-300)<\/li>\n<\/ol>\n\n\n\nFor this order, I went with option 2\u2014asked them to send one completed sweatshirt by DHL. Cost me $55, arrived in 4 days.<\/p>\n\n\n\n
I checked:<\/p>\n\n\n\n
\nPrint quality<\/li>\n\n\n\n Stitching<\/li>\n\n\n\n Fabric weight and feel<\/li>\n\n\n\n Sizing (compared to size chart)<\/li>\n\n\n\n Overall construction<\/li>\n<\/ul>\n\n\n\nIt looked good. Minor thread issue on one seam, but I could live with it.<\/p>\n\n\n\n
Week 6: The Big Payment<\/strong><\/p>\n\n\n\nSent the balance: $5,040 (70%).<\/p>\n\n\n\n
Again, added 5,115.<\/p>\n\n\n\n
Factory confirmed receipt two days later.<\/p>\n\n\n\n
Week 7: Shipment<\/strong><\/p>\n\n\n\nFactory sent:<\/p>\n\n\n\n
\nCommercial invoice<\/li>\n\n\n\n Packing list<\/li>\n\n\n\n Bill of lading<\/li>\n\n\n\n Tracking number<\/li>\n<\/ul>\n\n\n\nWeek 9: Delivery<\/strong><\/p>\n\n\n\nProducts arrived. Opened the boxes with that mix of excitement and dread\u2014excitement that they arrived, dread that maybe the quality is terrible.<\/p>\n\n\n\n
Quality was… good. Same as the sample they’d sent. Found maybe 8-10 pieces out of 600 with minor thread issues, but honestly acceptable for the price point.<\/p>\n\n\n\n
What Could’ve Gone Wrong (And Sometimes Does)<\/h3>\n\n\n\n That order worked out. But here’s what I’ve seen go wrong with the 30\/70 structure:<\/p>\n\n\n\n
Scenario 1: Quality doesn’t match<\/strong> You pay 30%, factory makes the stuff, you see it before the 70%… and it’s not what you expected. Now you’re negotiating from a position where you’ve already paid 30% and they have your products.<\/p>\n\n\n\nScenario 2: Factory goes silent after deposit<\/strong> You pay 30%, then… nothing. Emails go unanswered. This is the nightmare scenario.<\/p>\n\n\n\nScenario 3: They want 70% before production is actually done<\/strong> “We need the balance to finish production.” This is usually BS. Standard terms are balance before shipment<\/em>, not before completion<\/em>.<\/p>\n\n\n\nScenario 4: Delivery delays<\/strong> They keep postponing shipment, asking for more time. Meanwhile your money is tied up.<\/p>\n\n\n\n\nFrom my experience:<\/strong> The 30\/70 structure has worked for about 85% of my orders. The other 15% had issues\u2014but because I held back the 70% until I could verify quality, I had leverage to get refunds, discounts, or remakes. If I’d paid 100% upfront, I would’ve been completely screwed at least twice.<\/p>\n<\/blockquote>\n\n\n\nWire Transfers: The Default (And Why It’s Scary)<\/h2>\n\n\n\n TT\u2014Telegraphic Transfer\u2014is just fancy language for “international bank wire transfer.” It’s how probably 90% of clothing factory payments happen.<\/p>\n\n\n\n
How I Actually Send a Wire Transfer<\/h3>\n\n\n\n Here’s my step-by-step, learned through trial and error:<\/p>\n\n\n\n
Step 1: Get bank details from factory<\/strong><\/p>\n\n\n\nThey’ll send something like:<\/p>\n\n\n\n
Company Name: Guangzhou ABC Garment Co., Ltd.Step 2: Verify those details (CRITICAL)<\/strong><\/p>\n\n\n\nThis is where people get scammed. Email gets hacked, you receive fake bank details, you send money to a scammer.<\/p>\n\n\n\n
What I do now:<\/p>\n\n\n\n
\nCall the factory using a phone number I already have (not one from the email)<\/li>\n\n\n\n Read back every detail<\/li>\n\n\n\n If it’s the first payment, I also verify on a video call<\/li>\n\n\n\n Ask them to confirm via WhatsApp or WeChat (different platforms)<\/li>\n<\/ul>\n\n\n\nParanoid? Maybe. But I’ve seen people lose $10,000+ to this exact scam.<\/p>\n\n\n\n
Step 3: Decide how to send<\/strong><\/p>\n\n\n\nOption A: Traditional bank<\/strong><\/p>\n\n\n\n\nWalk into your bank branch<\/li>\n\n\n\n Fill out international wire form<\/li>\n\n\n\n Pay $35-50 fee<\/li>\n\n\n\n Wait 3-5 days<\/li>\n<\/ul>\n\n\n\nOption B: Online banking<\/strong><\/p>\n\n\n\n\nLog into your bank’s website<\/li>\n\n\n\n Submit international wire (if they offer it online)<\/li>\n\n\n\n Same fees and timing<\/li>\n<\/ul>\n\n\n\nOption C: Wise (formerly TransferWise)<\/strong><\/p>\n\n\n\n\nWhat I use now for most payments<\/li>\n\n\n\n Better exchange rates<\/li>\n\n\n\n Lower fees (usually 45-50)<\/li>\n\n\n\n Same security, faster sometimes<\/li>\n<\/ul>\n\n\n\nComparison from my last payment:<\/strong><\/p>\n\n\n\nSending $5,000 to ChinaStep 4: Send extra for fees<\/strong><\/p>\n\n\n\nIntermediary banks will take 3,000, I send $3,050.<\/p>\n\n\n\n
Step 5: Save everything<\/strong><\/p>\n\n\n\nI keep:<\/p>\n\n\n\n
\nWire transfer receipt from my bank<\/li>\n\n\n\n SWIFT confirmation (MT103 document)<\/li>\n\n\n\n Email confirmation from factory<\/li>\n\n\n\n Screenshot of my online banking showing the payment<\/li>\n<\/ul>\n\n\n\nWhy? Because if something goes wrong, this is your only proof.<\/p>\n\n\n\n
Step 6: Confirm with factory<\/strong><\/p>\n\n\n\nWithin 3-5 business days, factory should confirm receipt. They should tell you:<\/p>\n\n\n\n
\nExact amount they received<\/li>\n\n\n\n Date received<\/li>\n\n\n\n Ideally send you their bank receipt<\/li>\n<\/ul>\n\n\n\nIf amounts don’t match, figure out why and make up the difference if needed.<\/p>\n\n\n\n
Why Wire Transfers Are Scary (But Still Standard)<\/h3>\n\n\n\n The good:<\/strong><\/p>\n\n\n\n\nEvery factory accepts it<\/li>\n\n\n\n Relatively low fees<\/li>\n\n\n\n Fast (3-5 days)<\/li>\n\n\n\n Direct bank-to-bank<\/li>\n<\/ul>\n\n\n\nThe scary:<\/strong><\/p>\n\n\n\n\nCan’t reverse it once sent<\/li>\n\n\n\n Zero buyer protection<\/li>\n\n\n\n If bank details are fake, your money is just gone<\/li>\n\n\n\n Currency exchange fluctuations<\/li>\n<\/ul>\n\n\n\nMy approach to managing the risk:<\/strong><\/p>\n\n\n\n\nStart small with new factories.<\/strong> First order is always under 600-800. Losing that would suck, but wouldn’t destroy me.<\/li>\n\n\n\nVerify everything.<\/strong> Bank details, company registration, references\u2014check it all before sending money.<\/li>\n\n\n\nNever pay 100% upfront.<\/strong> I don’t care what their reason is. The 30\/70 structure (or similar) is non-negotiable.<\/li>\n\n\n\nUse inspection before final payment.<\/strong> That 70% balance is my leverage. I don’t send it until I’ve verified quality somehow.<\/li>\n\n\n\nDocument everything.<\/strong> Every email, every payment, every promise.<\/li>\n<\/ol>\n\n\n\nLetter of Credit: When It’s Worth the Hassle<\/h2>\n\n\n\n Letter of Credit (LC) sounds really official and secure. And it is. But it’s also expensive, complicated, and slow.<\/p>\n\n\n\n
I’ve used LC exactly twice in four years. Let me explain when it made sense and when it didn’t.<\/p>\n\n\n\n
What LC Actually Is (In Normal Language)<\/h3>\n\n\n\n An LC is basically your bank promising to pay the factory if\u2014and only if\u2014the factory provides proof they did what they were supposed to do.<\/p>\n\n\n\n
The flow:<\/strong><\/p>\n\n\n\n\nYou apply for LC at your bank<\/li>\n\n\n\n Your bank issues LC to factory’s bank<\/li>\n\n\n\n Factory makes your stuff and ships it<\/li>\n\n\n\n Factory gives their bank the shipping documents<\/li>\n\n\n\n If documents match the LC requirements exactly, factory gets paid<\/li>\n\n\n\n Your bank takes money from your account<\/li>\n\n\n\n You get the documents to claim your shipment<\/li>\n<\/ol>\n\n\n\nIt’s like having a referee (the bank) make sure everyone does what they promised before money changes hands.<\/p>\n\n\n\n
When I Used LC (And Why)<\/h3>\n\n\n\n First time:<\/strong> $32,000 order with a factory I’d never worked with before.<\/p>\n\n\n\nThis was my biggest order yet. Losing that money would’ve seriously damaged my business. The factory was legit (I’d verified everything), but we had no history together.<\/p>\n\n\n\n
What it cost me:<\/strong><\/p>\n\n\n\nOrder value: $32,000Was it worth it? Yes. The peace of mind alone was worth $575. Plus it actually made the factory take me more seriously\u2014LCs signal you’re professional and serious.<\/p>\n\n\n\n
Second time:<\/strong> Factory wouldn’t do third-party inspection, but would accept LC terms.<\/p>\n\n\n\nThis was a weird situation. Factory was resistant to letting me hire someone to inspect the goods before payment. But they agreed to LC with inspection requirements written into the terms.<\/p>\n\n\n\n
It worked\u2014they met all the requirements, provided inspection certificate, got paid.<\/p>\n\n\n\n
When LC Is a Waste of Money<\/h3>\n\n\n\n Small orders.<\/strong> If your order is under 400-600 in LC fees is probably not worth it. That’s 4-6% of your order value just for payment security.<\/p>\n\n\n\nEstablished relationships.<\/strong> If you’ve successfully completed 3-4 orders with a factory, you probably don’t need LC anymore. You’ve built trust.<\/p>\n\n\n\nRush orders.<\/strong> LCs take 1-2 weeks to set up. If you need to start production immediately, LC timeline doesn’t work.<\/p>\n\n\n\nWhen you don’t have bank credit.<\/strong> LCs require your bank to extend credit on your behalf. If your credit isn’t great or you’re new, banks might not do it.<\/p>\n\n\n\nThe Document Disaster Trap<\/h3>\n\n\n\n Here’s what nobody tells you about LCs: They’re ridiculously picky about documents.<\/p>\n\n\n\n
Real example that almost screwed up my first LC:<\/strong><\/p>\n\n\n\nThe LC said: “Port of Loading: Guangzhou” The Bill of Lading said: “Port of Loading: Nansha” (which is actually part of Guangzhou)<\/p>\n\n\n\n
Bank flagged it as a discrepancy. Factory had to get amended documents from the shipping company. Took 4 extra days and almost missed the LC deadline.<\/p>\n\n\n\n
Other stupid discrepancies I’ve seen:<\/strong><\/p>\n\n\n\n