Question 1

What are the most common payment terms Indian suppliers offer?

Accepted Answer

Most Indian suppliers work with one of four structures. Full advance (100% before shipment) is common for small orders but carries the highest buyer risk. Partial advance, typically 30% upfront with 70% before shipment or against a copy of the bill of lading, is the most widely used arrangement. Letters of credit (LC), especially irrevocable LCs, protect both sides and are standard for larger orders. Escrow services, where a third party holds funds until delivery is confirmed, are growing in popularity for mid-size transactions. The right choice depends on order size, your relationship with the supplier, and how much leverage you have.

Question 2

How can I reduce payment risk on a first order from India?

Accepted Answer

Start with a smaller trial order to limit exposure. Negotiate partial advance terms (no more than 30% upfront) with the balance payable against inspection or shipping documents. Ask for a proforma invoice with clear delivery milestones. Verify the supplier's GST registration, which confirms they are a real, tax-compliant business. For orders above $10,000, consider an irrevocable letter of credit through your bank. If you source through Sauda, every supplier quote comes from a factory whose GST filings and returns have already been checked, so you know the counterparty is legitimate before you send any money.

Question 3

When should I use a letter of credit instead of an advance payment?

Accepted Answer

A letter of credit (LC) is worth the banking fees when the order value is significant (generally above $10,000 to $15,000), when you are working with a supplier for the first time, or when the product requires a long production lead time. An irrevocable LC guarantees the supplier gets paid only after presenting compliant shipping documents, which protects you from non-delivery. Many Indian exporters are familiar with LCs and will accept them readily, though smaller factories sometimes prefer simpler terms because LC documentation can be time-consuming for them.

Question 4

How does Sauda verify that an Indian supplier is real?

Accepted Answer

Sauda checks each supplier's GST filings and returns before presenting a quote. GST (Goods and Services Tax) registration is India's primary business tax system, and active filing history confirms the supplier is a real, operating entity that regularly transacts and reports to the government. This is a meaningful layer of due diligence that goes beyond simply checking whether a company has a website or a listing on a directory. It does not replace your own quality inspection, but it ensures you are negotiating with a verified, tax-compliant business from the start.

Question 5

Is Sauda free for buyers? How does it make money?

Accepted Answer

Yes, Sauda is completely free for buyers. There are no fees, subscriptions, or commissions charged on the buyer side. Sauda earns from the supplier side. You simply send your sourcing requirement via WhatsApp (wa.me/9987549010), and Sauda finds GST-verified factories, contacts them, negotiates pricing, and returns the cheapest live quotes within 24 hours. The service works as a concierge, so you do not need to chase multiple suppliers yourself.

Question 6

Should I use escrow for paying Indian suppliers?

Accepted Answer

Escrow can be a good middle ground for mid-size orders (roughly $2,000 to $15,000) where a letter of credit feels too expensive or complex but full advance feels too risky. The buyer deposits funds with a neutral escrow service, and the money is released to the supplier only after the buyer confirms receipt or after shipping documents are verified. Not all Indian suppliers are familiar with escrow, so you may need to explain the process. Platforms like Escrow.com handle international transactions, though fees typically run 1% to 3% of the order value. For any payment method, verifying the supplier first is essential, which is one reason sourcing through Sauda (where GST verification is built in) reduces risk from the outset.

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