For the buyer, the safest common method on a first order is a letter of credit that requires an independent inspection certificate among its documents. A middle path, widely used in the Indian agri trade, is a modest advance plus the balance against documents, but only after you have verified the supplier and inspected the goods before loading.
Safety comes from the checks around the payment, not the method alone. This is general guidance, not financial or legal advice. Talk to your bank before you decide.
Ranking the options by your risk
- Full advance before production. Highest risk. Avoid on a first order unless the amount is small.
- Advance plus balance against scanned documents. Moderate risk if the supplier is verified and you inspect before shipping. See what CAD means.
- Documents against payment through banks. Similar, with banks handling the documents.
- Letter of credit at sight with an inspection certificate. Lower risk for you, higher bank costs and paperwork.
- Open account. Lowest risk for you, but Indian suppliers rarely offer it to a new buyer.
Why an LC is not the whole answer
A letter of credit pays against documents. It does not test the goods. Without an inspection certificate naming the parameters, a supplier can present compliant papers for poor goods. Our guide to letters of credit explains how to write one that works.
An LC also costs more and takes time to set up. On a small first order, the fees can be a large share of the value. Many buyers instead keep the advance modest and focus on supplier verification and inspection.
Whatever method you choose, the first payment should never be the moment you find out who the supplier really is.
Checks that make any method safer
- Verify the supplier: IEC, GST registration, Spices Board CRES or APEDA RCMC where relevant, and FSSAI licence.
- Visit or audit the facility, or have it done independently.
- Test an approval sample at an accredited lab against your specification.
- Inspect goods before or during loading, with photos and seal records.
- Confirm bank details by phone on a number you already hold.
- Agree in writing what happens to the advance if the supplier does not ship.
A practical structure
Many first orders run like this: a supplier check, approval samples tested, a contract with a modest advance, pre-shipment inspection, then the balance against documents. For larger values or less familiar suppliers, an LC with an inspection certificate is the step up. Read is a 30 percent advance safe for how to protect the advance.
How Creston & Co handles this
We verify the supplier before you send money, have samples tested at NABL-accredited labs, and inspect and supervise loading before you pay the balance. You pay the supplier directly. Ask for a free sourcing review.