When a brand talks about its factories, it usually talks about certifications and photographs of well-lit workrooms. The number that decides whether a small unit survives is duller than either: how long it waits to be paid.
How it normally works
The Indian apparel norm is 90 days from delivery. A unit cuts and sews an order in March, ships it in April, and sees the money in July. In the meantime it has paid for yarn, for electricity, and for its workers every week. The gap is bridged with working-capital debt at 14 to 18 per cent, or it is not bridged and the unit takes a smaller order it can self-finance.
Every part of that cost ends up back in the price we pay, and the part that does not gets absorbed by the least powerful party in the chain.
What we changed
We moved all four of our units to 30-day terms, with a 20 per cent deposit at order confirmation. It was not generosity; it was the cheapest lever we had on quality. A unit that is not financing our order out of debt can plan its own line, hold its trained staff between our seasons, and say no to the rush job that would otherwise displace ours.
What it cost
Roughly one season of growth. Paying 60 days earlier means carrying about two months of cost of goods on our own balance sheet, and for a business our size that money can only come out of the range plan. Volume 03 was 34 pieces instead of the 45 we had scoped.
We are not going to pretend that was painless or that it is a strategy available to everyone. It is available to us because we are small, we have no investors demanding a growth curve, and we sell most of what we make at full price.
What we got back
- Sampling turnaround went from three weeks to nine days, because we stopped being the customer that gets fitted around.
- Our defect rate at final inspection halved, from 4.1 to 2.0 per cent.
- The Ludhiana unit kept its full knitting team through the summer for the first time in four years, which is the outcome we care most about and the hardest to put in a marketing line.
None of this is certifiable. There is no logo for paying on time. It is just the thing that most changes whether the people making your clothes are all right.