Two suppliers quote the same unit price. One asks for 30% deposit and the balance against a copy of the bill of lading. The other asks for 50% deposit and the balance before shipment. The unit price is identical, but the cash-flow difference over a ninety-day production cycle is substantial — and one of those structures leaves you with far more leverage if something goes wrong.
How a Garment Order Normally Gets Paid
Most apparel orders between an overseas buyer and a Chinese manufacturer follow a two-stage structure.
The deposit releases production. It covers raw material purchase, which is the factory's largest upfront cost: fabric, trims, labels and packaging all have to be paid for before cutting begins. This is why almost no factory will start without one. A deposit is not a sign of distrust; it is how the material supply chain is financed.
The balance is paid at a point defined by the contract. The three common definitions are, in increasing order of buyer preference:
- Before shipment — the factory holds payment while goods are still in its warehouse. Simplest for the factory, riskiest for you.
- Against a copy of the bill of lading — goods are on the water and documents exist. A middle ground that most experienced buyers accept.
- After inspection and before shipment, or against the full document set — more protective, and usually only agreed with established customers.
Typical Percentages and What They Signal
For women's apparel orders, deposits commonly sit between 30% and 50%. What matters is not the number alone but what it is used for.
- 30% deposit is the conventional baseline for repeat or straightforward orders in standard fabrics. It suggests the factory has working capital of its own.
- 40–50% deposit is common for a first order, for custom-developed fabrics, or when materials must be specially purchased. The higher figure is often tied to a specific input cost, not general caution.
- Deposits above 50%, or full payment upfront on a first order deserve a direct question about what the money funds. A reasonable answer references named materials. A vague answer is a warning sign.
It also helps to separate the deposit question from the sampling cost. Sample fees are usually a separate, much smaller transaction and are sometimes credited back against bulk production. Do not confuse the two when comparing quotations.
T/T, L/C, and When Each Makes Sense
Telegraphic transfer (T/T) is the default for small and mid-sized apparel orders. It is fast, inexpensive, and straightforward. Its weakness is that once funds are sent, your protection depends on the contract and your relationship rather than on a bank.
A letter of credit (L/C) places a bank between the two parties. The bank releases payment when the presented documents match the L/C terms exactly. For orders above roughly USD 50,000, particularly with a new supplier, an L/C meaningfully reduces payment risk. It brings its own discipline: a single discrepancy between the shipping documents and the L/C wording can delay payment for weeks, so the terms have to be drafted carefully and the documents checked before presentation.
Other instruments occasionally appear. An escrow or platform-managed payment can suit very small trial orders where the cost of an L/C is disproportionate. Documentary collections offer a lighter alternative to an L/C but give the buyer less control than a letter of credit does.
Which Terms Are Genuinely Negotiable
New buyers often try to negotiate the deposit percentage first. In practice the more productive order of conversation is:
- Trade term (FOB, CIF, DDP) — this determines who controls freight and at what cost. Get this settled before discussing price, because it changes the total landed figure substantially.
- Balance trigger — moving from "before shipment" to "against copy of B/L" is a realistic request and costs the factory little. Buyers who ask only for a lower deposit while leaving the balance trigger unchanged often gain less.
- Deposit percentage — negotiable, especially once you have order history, but usually in exchange for something: a larger volume, a longer-term commitment, or accepting the factory's standard fabric rather than a custom development.
- Payment schedule in stages — for large or multi-style orders, splitting the balance into two payments tied to milestones can work for both sides.
Where a factory is genuinely flexible, it is often on the balance trigger rather than the deposit, because the deposit funds real material purchases while the balance is about timing.
Protecting Yourself Regardless of Structure
The payment structure is only one part of the protection. Three practices matter as much:
- Name the specification in the contract. Payment disputes are usually specification disputes. Attach the approved sample, the tech pack and the agreed inspection standard to the order confirmation.
- Agree the inspection point explicitly. State who inspects, at what stage, against what AQL, and what happens if the result is a fail. Payment terms should reference that inspection, not sit apart from it.
- Get the banking details verified independently. Confirm the beneficiary account through a second channel — a phone call to a known contact, not a reply to the email containing the invoice. Payment-diversion fraud targets exactly this moment.
What to Put in the Order Confirmation
A clear payment clause is short. It states the deposit percentage and when it is due, the balance percentage and its trigger event, the currency, the trade term, and the documents that must accompany the balance request. It also names the inspection standard that the balance is conditional on.
When those six items are unambiguous, the payment process stops being a negotiation at the end of production and becomes what it should be: an administrative step in a plan both sides already agreed on.
