Payment Terms for Overseas Manufacturing: A Beginner's Guide

The standard structure: deposit + balance

Nearly all custom apparel manufacturing runs on the same skeleton: a deposit (commonly 30–50%) with order confirmation, and the balance before shipment. The deposit funds fabric purchase and books production capacity; the balance gate gives the factory security that finished custom goods — unsellable to anyone else — will be paid for.

Your protection lives in what happens before each payment: you pay the deposit only after an approved sample, and the balance only after seeing the final inspection report (photos, measurements, defect log). Structured this way, at no point are you paying for something you haven't verified.

Payment methods compared

• Bank transfer (T/T): the industry standard. Low fees, direct to the factory's corporate account. The name on the account should match the company on your invoice — always.
• Wise: great for small amounts (samples, swatches) with transparent FX. Limits make it impractical for large balances.
• Letter of Credit (LC): your bank pays the factory's bank only against documents proving shipment. Strong protection, real cost (fees both sides, paperwork) — sensible above roughly $20–30k.
• PayPal / cards: 4–6% fees priced into your goods and a dispute model built for consumer e-commerce, not custom manufacturing. Occasionally fine for sample invoices; wrong tool for production.

Red flags that should stop a payment cold

• Bank details changed by email mid-order — the classic invoice-fraud move. Verify by phone/WhatsApp on a known number before sending anything.
• Personal account names instead of the company name on the invoice
• 100% upfront demands, or discounts for paying everything now
• Pressure to move off the record — away from email to only chat, with no invoice paperwork
• A supplier who resists video calls, factory tours, or third-party inspection before you pay

Structuring a safe first order

The sequence that de-risks a first order costs almost nothing extra: video call with the team, paid sample (small money, big information), modest first production run, third-party pre-shipment inspection if you want independent eyes, balance only after the inspection report. Any factory that welcomes all five steps is signaling exactly what you want to know.

Our own terms follow everything in this article — deposits 30–50%, balance after your approval of the AQL 2.5 photo report, LC available for larger programs, and bank details that never change by email.