Textile wholesale: metres, bales, agents and long credit

The fabric chain

Yarn goes to weavers and mills, grey fabric goes to processors for dyeing and printing, and finished fabric reaches wholesalers in textile markets. Wholesalers sell to retailers of fabric, tailoring shops, garment manufacturers and sub-wholesalers in other cities. Sarees, suiting and shirting, dress materials, home textiles and unstitched suits each have their own markets and clusters.

Brokers and commission agents are central. A retailer in a small town may buy through an agent who visits several wholesalers, places orders, and later helps collect payment. The agent's commission and the retailer's credit period are usually agreed at the time of the deal.

Units: metres, thans, bales and pieces

Fabric is bought and sold in metres but handled in thans (rolls) and bales. A single bill may list fabric in metres, sarees in pieces and suit sets in sets. In Tally, keep metres as the base unit for running fabric and use an alternate unit for than or bale where the length is standard; for fixed-length items like sarees, use pieces. See alternate units in Tally.

Short length (a than that measures less than stated) and damage found on unrolling are common claims. Measure inward goods on receipt where practical, note shortages on the receipt note, and raise a debit note to the supplier the same week.

Credit and how money gets stuck

Long credit is the defining feature. Bills of 60, 90 or more days are common, and in practice payment often comes later still, sometimes in parts. Some markets also give a cash discount for early payment. Because most trade passes through agents, the wholesaler may not deal directly with the retailer for collection.

• Record the agent on every bill, so outstanding can be viewed by agent as well as by party.
• Review bill-wise ageing every week; long credit hides problems until they are large.
• Agree in writing how returns, short-length claims and cash discounts will be settled.
• Stop new supplies to parties whose oldest bill is far past the agreed period, whatever the agent says.

For payments to micro and small enterprise suppliers, there are legal time limits that also affect the tax deduction for the buyer; see the MSME payment rule.

Job work and processing

Many wholesalers send grey fabric to processors for dyeing, printing or finishing, or send finished fabric to embroidery units. The goods leave your godown but still belong to you. Record these movements with delivery challans and receipt notes so you know how many metres are lying at each processor, and reconcile when the goods come back. Processing losses, a few percent of length, should be recorded rather than left as a stock gap. The guide on GST on job work covers the tax side.

Designs, seasons and samples

Printed and dyed fabrics follow fashion and festival seasons. Wholesalers send swatches and photos to retailers through agents and on WhatsApp, and book orders before goods are processed. Designs that do not sell become dead stock, sold later by weight or at deep discount. Track stock by design and age, and decide early which designs to clear.

GST points for textile traders

Yarn, grey fabric, processed fabric, made-ups and garments can fall under different HSN codes and rates, and textile rates have been revised more than once. Check the current rate for each on the GST portal, and keep HSN codes accurate because they appear in your returns. Job-work charges, transport and agent commission each have their own GST treatment; agree it with your accountant. This is general information, not tax advice.

Cashflow OS with Tally for textile wholesalers

Cashflow OS syncs your TallyPrime books to the phone and web. Bill-wise outstanding and ageing for every retailer is a tap away, and statements go to retailers or agents on WhatsApp as a PDF in Tally's format or a simple Hindi हिसाब page. Delivery challans with your branding track goods sent to processors. Item photos and an online catalogue help agents show designs. Reports can cover custom date ranges across financial years, useful when credit runs past March. See party ledger statements.