The Ludhiana Fastener Order
A buyer in Ludhiana sent the full amount to a Gujarat supplier for a container of fasteners. This was March. By the second week his calls were ringing out. The cartons reached him three weeks late, and his inspector pulled out roughly half for bad threads. He got an apology on the phone. The money had been sitting in Gujarat for a month by then, so an apology was all he had to bargain with.
I bring up that order with anyone who calls payment terms paperwork. Nothing else in a deal decides so quickly who is stuck holding the problem.
How B2B Payment Terms in India Get Argued Out
Price goes first. Terms come later, usually on a phone call that has already gone on too long. Whoever needs the deal more gives way. I watched a buyer in October, two weeks before Diwali with half-empty shelves, accept a term he'd have laughed at in August. A manufacturer with a dead line in July does the same thing from the other side.
Most orders I've seen end up in one of two camps, money first or goods first. The letter of credit sits awkwardly between them. Each camp suits a different stage of knowing the other party, and nobody tells you which stage you're in. You work it out after the first late shipment.
Advance Payment B2B Deals With New Suppliers
A small foundry in Rajkot asked a buyer for thirty percent on a casting order. Fair. They'd already bought the metal and nobody buys metal on hope. I wouldn't argue with that figure.
Full advance is where I get uncomfortable. A textile buyer in Surat paid the whole lot to a trader he'd found online. The fabric arrived and the GSM was visibly off. He tried calling. The trader had moved on to the next customer, and there was no one left to argue with.
With a supplier I haven't dealt with twice, I'd go for something like thirty or forty percent to start and the rest against the delivery papers. A supplier who won't take even that has told me plenty already, and I walk.
The Percentage Nobody Haggles Over
Buyers will spend three days on a rupee off the unit price and then accept the advance figure in half a minute. On a ten lakh order the gap between thirty and fifty percent is two lakh sitting in someone else's account all through production. A packaging buyer in Noida brought his down by about a third. All he did was ask for a photo of the work in progress before each payment went out. Suppliers don't mind that. They've nothing to hide when the job is moving.
Letter of Credit India Orders and the Comma Problem
A machinery buyer in Coimbatore opened a credit for a CNC import and lost most of a week to one mismatch. The invoice described the machine one way and the credit described it another. The bank bounced the documents over a difference you'd need a magnifying glass to find. He was furious. I'd have been too.
Still, on a big first order with someone in another state or another country, I lean toward the LC. The supplier gets paid once the shipping papers are clean, and the buyer's money stays put until the goods have really left. Neither side has to trust the other much. I like that on a first order.
On repeat orders with someone who has delivered cleanly for six years, I'd skip it. The bank fee on a relationship like that is money thrown away.
Credit Terms Manufacturers Offer, and What Thirty Days Turns Into
On paper it reads generously. Net thirty, sometimes forty-five, and sixty if they badly want you. A distributor in Kanpur I dealt with paid at ninety days on a thirty-day arrangement for most of a year. The manufacturer said nothing. He raised the rate quietly instead, and the distributor never connected the two.
Credit costs something, and it gets priced into the quote. Buyers who pay on the day tend to get a sharper figure than the ones who take every available day, though plenty never ask for it.
Smaller units can't carry this at all. A powder-coating shop near Faridabad lives on monthly cash. Two buyers paid late in one quarter and he delayed wages for his own workers. After that he put everybody on advance or very short credit. The late payers felt it hardest, which seemed fair to me.
The Mistake That Shows Up Every Season
One buyer I know demanded sixty days from a workshop with four machines. The workshop couldn't survive that and dropped him by the next quarter. Another paid full advance to a big stable plant that would have given him thirty days without a second thought. Both lost something. One lost a supplier, the other lost a month of working capital for no reason at all.
A workshop with four machines needs money quickly. A plant with its own finance department can wait a month and barely notice. I size the term to the supplier before I think about my own convenience.
Where Manufacturers Find Buyers Who Pay Properly
A brass fittings factory in Moradabad had good capacity and still spent half its week chasing money. The buyers it had attracted were casual ones who squeezed on credit and then paid late. The clause in the contract wasn't the issue there. The inquiries were.
Manufacturers who want serious buyers from the start usually get them by being visible where those buyers look, and the buyer generation work TIS Nexus does is built around exactly that. Someone who finds you through a proper channel has generally thought about how he'll pay before he calls.
I'd rather take ten serious inquiries than fifty that vanish when someone mentions a partial advance. Something like two in five of the casual ones used to disappear at that point. I stopped counting them as a loss a while ago.
Writing It Down Before the Order Starts
Two cousins in the hardware trade stopped speaking over an unpaid balance after a Diwali rush. Nothing had been written, so each of them remembered a different deal. A single page with the advance amount, the day the balance falls due and the date credit begins would have saved them. It takes ten minutes.
For manufacturers still working out who their next buyers should be, I'd start by looking at TIS Nexus and how it finds them. The full buyer sourcing service is laid out on one page, which is more than most outfits manage.
The Ludhiana buyer pays forty percent now and the rest against the bill of lading. He still orders from that Gujarat supplier.