Payment terms in apparel manufacturing can be confusing for buyers new to the industry — particularly when dealing with international manufacturers. This guide explains the standard payment structures, what to expect on first and repeat orders, and how to avoid common payment mistakes.
Standard Payment Terms in Apparel Manufacturing
First orders: 30–50% advance
For first-time buyers with no established relationship, manufacturers typically require an advance payment of 30–50% of the order value before production begins. This covers material purchasing — fabric, trims, labels — and protects the manufacturer against buyers who cancel after production has started.
The balance (50–70%) is typically due before shipment — after goods have passed QC inspection and you have received pre-shipment inspection approval. Payment before shipment is standard and protects both parties: the manufacturer receives full payment before releasing goods; the buyer retains leverage until goods are confirmed acceptable.
Repeat orders with established buyers
As relationships develop, payment terms often become more flexible: 30% advance with 70% on sight of shipping documents, or open account terms (where the manufacturer ships against a purchase order with payment due 30–60 days later) for established buyers with good payment history.
Currencies: USD, GBP and EUR
Apparel manufacturing is globally priced in USD — it is the default currency for international trade. UK buyers typically prefer to pay in GBP; European buyers in EUR. Working with a manufacturer that has a US-registered entity and a US bank account enables payment in all three currencies without the correspondent banking complexity that comes with paying directly to accounts in less-established banking jurisdictions.
A manufacturer invoicing through a US-registered entity (like AJ Apparel International LLC) means your bank processes the payment exactly as it would any other international USD transfer. No special documentation, no correspondent bank delays, no unusual payment flags.
Wire Transfer vs Other Payment Methods
International bank wire transfer (SWIFT) is the standard payment method for apparel manufacturing. It is traceable, documented and provides a clear audit trail. Other methods to be aware of:
- Letter of Credit (LC) — a bank instrument used for large orders. Provides security for both buyer and manufacturer but involves bank fees and paperwork. Typically used for orders above $100,000.
- ACH transfer — US domestic bank transfer. Available when paying a US-registered entity from a US bank account. Lower cost than international wire.
- Avoid — informal transfers, cryptocurrency, personal accounts, or any payment method that lacks a clear documentary trail.
What to Include in Payment Documentation
For every payment made to a manufacturer, document: the invoice number and date, the purchase order reference, the amount paid and currency, the payment reference used, and bank confirmation of transfer. This documentation protects you in any dispute and supports your accounts and VAT records.
Payment Red Flags
- Manufacturer requests payment to a personal bank account
- Manufacturer requests 100% advance before sampling
- No written invoice provided before payment is requested
- Pressure to pay via informal channels "to avoid bank fees"
- Account details that change between orders without clear explanation
Legitimate manufacturers invoice through properly registered commercial entities, provide detailed invoices referencing your purchase order, and use established banking channels. Any deviation from this is a serious red flag that warrants investigation before payment.