The most common terms for a new buyer are an advance of 30 to 50 percent when the order is confirmed and the balance before the goods leave the workshop. Samples are almost always paid in full up front, and small first orders are often paid 100 percent in advance.
Terms are negotiable, but they follow the maker's risk. A workshop buys brass, stones and plating chemicals for your order, and much of what it makes for an overseas buyer cannot easily be sold elsewhere.
The usual options
- Advance plus balance against inspection: an advance on order, and the balance once a pre-shipment inspection passes. This is the most useful structure for a buyer.
- Advance plus balance against copy documents: the balance is paid when the maker sends a copy of the airway bill or bill of lading. This is common for repeat buyers shipping by sea.
- Full payment before dispatch: normal for samples, very small orders and first trial runs.
- Letter of credit: possible with larger exporters, but bank charges and paperwork make it uneconomic for most jewellery orders.
- Open account or credit days: usually offered only after several clean orders, and mostly by exporters rather than small workshops.
How to protect the advance
Pay the advance only to a bank account in the same name as the company on the invoice, and check that name against its GST and IEC registrations. Be wary of any request to pay a personal account or a different firm, or of bank details that change partway through the order.
Tie the balance to something you can see. A pre-shipment inspection report, photos of the packed cartons with counts, or a video of the finished lot gives you a reason to release the money, and a reason to hold it if the goods are not right.
Agree terms before production starts
Write the payment terms into the purchase order and the proforma invoice: the percentage, the trigger for each payment, the currency and who pays bank charges. Agree what happens if inspection fails, for example rework at the maker's cost before the balance is due.
Terms usually improve with time. After two or three clean orders, many makers will lower the advance or accept the balance against documents.
What this means for a buyer
Accept a reasonable advance, but never release the balance without independent evidence that the goods match the approved sample. Creston & Co works for buyers only, for a fixed fee agreed in writing: we check the supplier's registrations, inspect the lot before you pay the balance and supervise packing. Start with a free sourcing review.