How do I tell if an apparel contractor is paid late by its clients?

Request the accounts receivable list showing who owes what and how long each invoice has been open. Then compare it with bank deposits for several months. Match a sample of invoices to the day payment actually arrived. The gap, repeated across clients, shows the real payment habit.

Look at each major client separately. One slow brand can drag down a contractor that depends on it. Ask whether any client has asked for longer terms, and whether the contractor has agreed. Ask about disputes over quality or deadlines, which are common reasons for withholding payment.

Look for signs of cash strain elsewhere. Does the contractor pay its own suppliers late? Is it using a credit line or the owner’s own money to meet payroll? Are there rush payments to the sewers on a Friday? These clues reveal what the books may not. Ask your accountant to review the receivables and estimate how much working cash you would need to carry. Ask whether any invoices are unlikely to be paid, and how that is shown in the accounts. Ask also whether the contractor has ever stopped work for a client who was behind on payment. How the owner handled that shows how firmly the shop manages its own cash.

Key takeaways

• Get an ageing report and match invoices to actual deposit dates.
• Look at each client separately, and ask about disputes.
• Watch for strain: late supplier payments, credit use or owner top-ups.