Textile traders often sell through agents and brokers and on long credit, so check the buyer itself, not just the agent who brings the order. Verify the buyer's GSTIN and names, read its filing record, look for defaulter reports and court cases, and agree the credit period, discount for early payment and goods-return terms in writing. Keep proof of delivery for every lot, and start reminders as soon as a bill is overdue.
Risks specific to textile trade
- Orders through agents or brokers. The agent knows the buyer, but the debt is the buyer's. Verify the buyer's own GSTIN and get the order in its name.
- Long credit periods. Long, informal credit periods tie up your working capital. Put the period in writing and print the due date on the invoice.
- Goods returns and quality disputes. Late claims of short delivery or defects are a common reason for delayed payment. Agree how many days the buyer has to raise a quality complaint.
- New firms placing large orders. A newly registered buyer with a large first order deserves extra checks.
- Buyers in other states. Check that the GSTIN state code matches the billing address, and that IGST is charged on an inter-state sale.
Checklist before you dispatch on credit
- Run the buyer's GSTIN through the free GST lookup or the free Basic check in the app.
- For a new buyer or a large order, take the Advance GST report for the filing record and defaulter reports, or the GST + Financial report for court cases and the owner's credit record (with consent). See buyer verification.
- If the buyer is a company, look it up on the free company search.
- Confirm the order, rate, credit period and return terms in writing with the buyer, not only with the agent.
- Keep the lorry receipt, e-way bill and signed delivery challan for each lot.
- Set a credit limit for the buyer in Receivables and add large buyers to the watchlist.
If payment is delayed
Stop further dispatches on credit. Ask in writing whether there is any quality or quantity dispute, so it is raised now rather than later. Then follow up with reminder calls and emails, and send a legal notice if the buyer does not respond. If you are a Udyam-registered micro or small enterprise, the MSMED Act limits the credit period to 45 days from acceptance and gives you interest on late payment; see credit terms for B2B sales.
Frequently asked questions
How do I check a textile buyer before giving credit?
Verify the buyer's own GSTIN and names, read its filing record, look for defaulter reports and court cases, and confirm the order and terms with the buyer directly, not only with the agent.
Is the agent responsible if the buyer does not pay?
That depends on your arrangement with the agent. Usually the debt is the buyer's, so verify the buyer and keep the order and invoice in its name.
Can a buyer delay payment by claiming defective goods?
Disputes are a common reason for delay. Agree in writing how long the buyer has to raise a quality complaint, and keep delivery proof for every lot.
Does the MSME 45-day rule apply to textile traders?
It applies when the supplier is a Udyam-registered micro or small enterprise. Check whether your registration and your activity qualify.
This guide is general information for Indian businesses, not legal or tax advice. GST data shown by any tool comes from public records and should be confirmed on the GST portal before you act on it.