Chemical and dye traders: drums, batches and industrial credit

Products and customers

The trade includes industrial chemicals, solvents, acids and alkalis, dyes and pigments, textile auxiliaries, water treatment chemicals, and speciality chemicals for specific industries. Traders buy from manufacturers, importers and larger distributors, and sell to textile processors and dyeing units, paint and ink makers, pharma and food units, leather tanneries, plastics and rubber processors, and water treatment plants.

Industrial buyers often have a fixed list of approved suppliers and products, and switching requires trials. Once approved, a trader gets steady repeat orders, but must keep quality and documentation consistent.

Sampling and approvals

New business in chemicals usually starts with a sample. The factory tests it in the lab, then in a production trial, and only then places an order. This can take weeks, and samples cost money. Record samples sent, to whom and for which product, and follow up on the result. When a product is approved, note the exact grade, supplier and specification against the customer, so every later delivery matches what was approved. Changing the source of a product without telling an approved customer is one of the quickest ways to lose the account, even if the new material is technically similar.

Units, packing and containers

Chemicals are sold by weight or volume and packed in bags, drums, carboys, IBC tanks or tankers. A single item might be sold as 25 kg bags or 200 litre drums. Returnable drums and IBCs carry a deposit or must be returned, and should be tracked per customer. In Tally, set kilograms or litres as the main unit with the pack as an alternate unit; see alternate units in Tally.

Batches, quality and documents

Factories expect each delivery to come with the manufacturer's batch number and a certificate of analysis, and sometimes a safety data sheet. Dyes and pigments are checked for shade strength against a standard. Keep batch numbers on purchase and sales invoices, and file the certificates so they can be sent quickly when asked. Tally can keep batch details where enabled. If a customer rejects a lot, take it back against a credit note and settle with your supplier using the same batch reference.

Price movement and quotations

Many chemical prices follow crude oil, global supply, import duties and exchange rates, and can change weekly. Quote with a validity date, state whether freight is included, and for contracts agree how price changes will be handled. When prices rise, confirm the rate on each order before dispatch, so the invoice does not become a dispute. See pricing strategy for traders.

Credit and working capital

Suppliers of chemicals, especially importers and manufacturers, often want advance or short credit, while processors and factories pay in 60 to 90 days or more. The trader finances the gap. A single large processor delaying payment can strain the business. Review ageing every week, set limits by customer, and watch for patterns such as part payments and post-dated cheques being replaced. The guide on the working capital cycle shows how to measure the gap.

Storage and handling

Many chemicals are hazardous and have specific storage, labelling and transport requirements under safety and pollution control rules. Some require licences or registrations to store or sell. Check the rules that apply to the products you handle with the relevant authorities. Spills, leaks and evaporation losses should be recorded as stock adjustments.

GST points

Chemicals and dyes are spread across many HSN codes, and an accurate HSN code on every item matters because it appears in GST returns. Rates differ by product; check the current rate for each on the GST portal. Imports involve IGST at customs and documentation for input credit. Deposits on returnable containers have their own treatment; ask your accountant. This is general information, not tax advice.

Cashflow OS and Tally for chemical traders

Cashflow OS syncs your TallyPrime books to the phone: bill-wise outstanding and ageing for every factory buyer, supplier payables, and cash and bank balances. Quotations with your letterhead carry validity and terms and convert into orders or Tally invoices. Delivery challans and purchase orders are created with your branding. Reports export to Excel for reconciliation with large buyers. Batch details stay in Tally. See outstanding receivables.