Escrow vs 30-Day Credit: Pricing Payment Risk Honestly
Credit is not free — it is a discount you pay in working capital and bad debt. A frank comparison of settlement structures in the Indian scrap trade.
The true cost of credit terms
A yard extending 30-day credit finances the buyer's furnace. At realistic borrowing costs that is ₹350–₹600 per tonne, before accounting for the occasional total loss. Sellers who price credit properly usually discover that a lower headline rate with escrow settlement nets more.
What escrow actually guarantees
Funds are locked at booking, so the seller knows the money exists before the truck loads. Release happens against verified delivery, so the buyer is never paying for weight that did not arrive. Neither side holds the other's money.
- Seller sees confirmed funds before dispatch
- Buyer pays only for verified net weight
- Disputed tonnage is held, not litigated
When credit still makes sense
Long-standing relationships with audited counterparties and predictable monthly offtake can justify terms. For first transactions, distant counterparties and volatile grades, escrow is the cheaper structure once risk is priced in.