Standard Payment Terms for First-Time Customers of Steel Mills

Standard Payment Terms for First-Time Customers of Steel Mills

Establishing clear and secure payment terms is a fundamental step for first-time customers entering a business relationship with a steel supplier. Understanding the standard practices helps build trust and ensures a smooth transaction for both parties. For new clients, steel mills typically employ conservative yet straightforward payment structures to mitigate risk while facilitating trade.

The most common and secure payment term for initial orders is a T/T (Telegraphic Transfer) with an advance payment. A typical structure involves a 30% down payment upon signing the proforma invoice (PI), with the remaining 70% balance paid against the copy of shipping documents before the goods are released. This method provides security for the supplier to commence production and assurance for the buyer that their goods have been manufactured and shipped.

For larger orders or when a track record is established, suppliers may consider a Letter of Credit (L/C). An L/C, issued by the buyer's bank, guarantees payment to the supplier upon presentation of specific shipping documents. It offers security for both sides but involves more complex procedures and banking fees.

At Ruixiang Steel, we value our new partnerships and strive to make the procurement process as transparent as possible. While we adhere to standard industry payment practices for initial orders, we are committed to working flexibly with our clients. Our goal is to build long-term relationships, and as trust grows, we can explore more flexible payment arrangements to support your business needs.