Guide · Jewellery trade

Managing trade credit and payment risks in the Indian jewellery industry

Jewellery is a high-ticket, relationship-driven trade. Most deals between karigars, wholesalers and retailers still run on udhaar — open credit for 7, 30, 60, even 120 days. That trust is what makes the industry move, and also what quietly sinks businesses every year. This guide is for owners who want to grow without learning bad-debt lessons the hard way.

1. Why trade credit decides who scales

The cheapest way to grow a jewellery business in India is to give credit. The fastest way to kill one is to give credit to the wrong buyer. A single ₹15–20 lakh write-off can take out a year of margin for a mid-sized wholesaler. Most owners only realise this after it happens — once, sometimes twice — and then become so conservative that growth stalls. The right answer is in between: extend credit deliberately, against verified counterparts, with documented terms.

2. Verify the buyer before the first invoice

Before you ship goods on credit, get four things on file:

• GSTIN — confirm it's active on the GST portal and matches the legal name.
• PAN and constitution — proprietorship, partnership, or private limited changes how easy recovery is.
• Bank account — at least one cancelled cheque so payments are traceable.
• Reputation — what other suppliers say about their payment behaviour.

That last one is the hardest to get alone. Asking around your circle works for the first ten buyers; after that it stops scaling. This is exactly the gap HisaabScore fills — verified ratings from other GST-registered businesses, so a 30-second search tells you whether a new buyer is a Good payer, a Bad payer, or someone to Avoid.

3. Set credit terms in writing — even with relatives

The most expensive disputes in jewellery are with "we've worked together for 20 years" buyers. Every credit deal — even with cousins — should specify: amount, due date, late-payment interest (commonly 1.5–2% per month), and what counts as default. A one-page credit note signed by both sides removes 90% of future disagreements.

4. Stage your exposure

Never extend full credit to a new buyer. A simple ladder works for most wholesalers:

• Deal 1–2: full advance or PDC.
• Deal 3–5: 50% advance, 50% credit, max 30 days.
• After 5 clean settlements: open credit up to a fixed limit.
• Review the limit every quarter against actual payment behaviour.

5. Watch the early-warning signals

Buyers rarely default overnight. Before a bad debt, there is almost always a pattern: cheques presented and bounced once, then "replaced"; partial payments with vague promises; ignored acknowledgement requests; sudden requests for larger orders right before festival season. Treat any two of these in a quarter as a signal to freeze further credit and clear the existing balance.

6. Build your own reputation, too

Trade credit flows both ways. Suppliers extend credit faster to jewellers known for clean settlements. Pay on the due date — not on the reminder. Acknowledge invoices the same day. Over a few years, a clean payment record is worth a higher gross margin: it unlocks better terms from your own karigars and bullion dealers, and it lets you negotiate harder on price.

7. When something goes wrong

If a payment is overdue:

• Day 1 after due date: a polite written reminder.
• Day 7: a formal recovery notice referencing the credit note.
• Day 15: stop further supply and escalate in person.
• Day 30: a lawyer's notice and a public reputation flag so the rest of the trade is protected.

Public flagging used to mean WhatsApp groups and word of mouth. Today, a GST-verified rating on HisaabScore reaches every supplier who searches that buyer — and it stays on the record.

Grow with verified trust

The jewellers who scale past ₹10 crore in turnover are almost never the ones with the best designs — they're the ones with the best collections. Disciplined credit is what gets you there.