A buyer in Seattle wired a 30% deposit to a new silver supplier, with the 70% balance due against the bill of lading copy. The goods left the factory three weeks late. By the time she saw the BL copy, her customer's event had passed and the 70% was already owed. She had accepted a payment term that sounded standard but gave her no leverage on the delay. The next order, she negotiated a 50/50 split tied to pre-shipment inspection.

Payment terms are not just about moving money. They are about leverage: who has the goods, who has the cash, and what happens when something goes wrong. Here are the three structures used in wholesale jewelry and when to use each.

T/T (Bank Transfer): The Default, and Where It Fails

Telegraphic transfer is the most common structure: 30% deposit on PO, 70% balance before shipment or against the BL copy. It is fast and cheap, but it puts most of the risk on the buyer once the deposit is wired. To make T/T safe, tie the balance release to a pre-shipment inspection report, not to a friendly email. The inspection catches defects before the goods ship. For new suppliers, this single step prevents most disputes. Compare structures in T/T, escrow, and LC compared.

Escrow: When a Neutral Third Party Helps

Escrow holds the buyer's money with a neutral provider and releases it to the supplier when agreed conditions are met. It is slower and costs a fee (often 0.5-2%), but it is the right tool for a first order with a supplier you have not vetted. It also works for disputes: the escrow agent can mediate on inspection results. For new buyers, our guide on payment terms for new buyers walks the negotiation.

Letter of Credit (LC): For Larger Orders

An LC is a bank guarantee. The buyer's bank promises to pay the supplier when documents (invoice, packing list, BL, inspection certificate) match the LC terms exactly. LCs are used on orders over $15,000-$20,000 and require careful document matching; a typo in the invoice can delay payment. They are overkill for a $2,000 first order, but they are the standard for repeat reorders at volume. The trade-offs are in T/T vs LC vs escrow side by side.

What to Negotiate Beyond the Split

The deposit percentage is only one line. The more important lines are: when the balance is due, who pays inspection fees, what happens on late shipment, and whether the price is locked. Ask for a 7-day delay allowance before penalties, and ask that the inspection report be a condition of balance release. These lines cost the supplier nothing when they are on time, and they protect you when they are not. Pair with MOQ negotiation patterns for the broader commercial conversation.

Currency is another line buyers forget. If your supplier invoices in CNY and your revenue is USD, a 5% move in the exchange rate wipes out a thin margin. Ask the supplier to hold the USD price for the order validity period, or split the FX risk 50/50. For reference on how letters of credit and trade finance are structured, the letter of credit overview walks the mechanics. Do not treat the FX line as someone else's problem; it is a real cost on every reorder.

Currency is another line buyers forget. If your supplier invoices in CNY and your revenue is USD, a 5% move in the exchange rate wipes out a thin margin. You can ask the supplier to hold the USD price for the order validity period, or split the FX risk 50/50. For reference on how letters of credit and trade finance are structured, the letter of credit overview walks the mechanics. Do not treat the FX line as someone else's problem; it is a real cost on every reorder.

FAQ

Is 30% deposit normal for wholesale jewelry?

Yes, 30% deposit with 70% before shipment is the industry default. For a first order with a new supplier, ask for inspection before balance release rather than a smaller deposit.

Should I use escrow for every order?

No. Escrow is best for first orders or orders over $3,000-$5,000 with an unknown supplier. Once a supplier has a clean reorder history, T/T with pre-shipment inspection is faster and cheaper.

When is a letter of credit worth it?

For orders over roughly $15,000-$20,000 where the buyer needs bank-level security. Below that, bank fees and document handling make the LC impractical.

Who pays for pre-shipment inspection?

Usually split or borne by the buyer; agree it in writing on the proforma invoice. A few hundred dollars of inspection is cheap insurance on a $5,000 order.

What if the supplier wants 100% T/T in advance?

Treat it as a red flag for a new supplier. Established relationships sometimes run balance-before-shipment, but 100% advance on a first order leaves you with no leverage. Ask for escrow or a deposit split.

Setting terms for a new wholesale relationship? HOLYCOME works on T/T with pre-shipment inspection, and supports escrow on first orders. Ask for our standard proforma invoice and compare the release conditions line by line.