Payment terms are the negotiation every order has and almost nobody explains. The buyer wants to pay late and little; the factory wants early and all; both sides quote "industry standard" at each other. After years of running export orders from our floor in Anji, here is the actual logic — why the standard structure looks the way it does, where it flexes, and the versions we decline because they end badly for one side or both.
Why T/T 30/70 is the default
The structure you will meet most is a telegraphic-transfer split: 30% deposit on order confirmation, 70% balance before shipment or against a copy of the bill of lading. The deposit is not profit and it is not a goodwill gesture — it is the materials commitment. The moment your order confirms, we cut fabric and leather to your colours, book resin and steel, and place orders on cylinders and mechanisms for your spec. If the order dies after that, those materials are ours to hold; the deposit means the buyer shares that exposure instead of parking all of it on the factory. The 70% balance mirrors the same logic in reverse: the goods exist, they are inspected, and the buyer pays before the paperwork that controls the cargo changes hands. Balance against B/L copy is the fairer variant — you pay when the goods are demonstrably on the water — and it is what we run with most repeat buyers.
The variations that are reasonable
Within that frame, real flex exists. Repeat buyers with clean history move to 20/80 or balance-at-sight-of-documents without much argument — track record is the currency. Large programs sometimes run milestones: a slice at order, a slice at mid-production, the rest tied to a passed final inspection, which aligns everyone on the inspection result instead of the calendar. Tying the balance to the inspection rather than the ship date is a structure we actively like, because it puts the pressure where it belongs — on the goods being right. What changes the percentages most is not negotiation skill; it is order history, order size relative to our lines (we run 80,000 m² and over two million chairs a year, so a single 40HQ does not strain the materials budget the way it would a small workshop), and how custom the spec is. Heavily customised goods mean unsellable materials if the order collapses, so custom work carries firmer deposits than catalogue models.
Letters of credit: when the fees earn their keep
A sight LC replaces trust with a bank: the buyer's bank promises payment when we present documents that exactly match the credit's terms. For a first large order between strangers, that is a genuinely good trade — the buyer's cash is not exposed to a factory they have never met, and our production is not exposed to a buyer who might vanish. The costs are real, though. Bank fees land in the hundreds to low thousands of dollars depending on the amount, and the document discipline is unforgiving: a misspelled consignee or a late presentation becomes a "discrepancy," and discrepancies mean delay and extra fees even when the goods are perfect. Our rules for accepting an LC: sight only for new relationships, no soft clauses that make payment depend on the buyer's own signature after arrival — a soft-clause LC is a 100%-after-delivery deal wearing a bank's letterhead — and the credit opened by a real bank we can confirm. Below roughly a container's value, the fees and friction usually outweigh the protection; T/T with a third-party inspection does the same job cheaper.
What we decline, and what you should decline
We say no to 100% after delivery from a new buyer, full stop — that is shipping goods on faith to someone whose only obligation is moral. Open-account terms, where established Western buyers pay 30 or 60 days after arrival, do exist in this trade, but the factories offering them are carrying export credit insurance and years of history with that exact customer; as an opening position from a new account, it is a non-starter. In the other direction, a buyer should refuse 100% upfront just as firmly. A factory that demands everything before production has either a cash problem or a confidence problem, and either one becomes your problem. The healthy structure leaves both sides with something to lose until the goods are on the water.
The boring protections that matter more than the percentages
Three habits prevent most payment disasters. Pay the company account whose name matches the business license and the contract — a request to wire to a personal account or a different entity is the single loudest alarm in this business, and it is also how invoice-hijack fraud works, so confirm any sudden change of bank details by a second channel before sending anything. Get a proforma invoice that states the goods, the terms, the bank details and the inspection condition in one document. And remember that payment terms interact with price: money has a cost, so a buyer pushing for later payment is asking us to finance the order, and that financing shows up in the unit price. Sometimes that trade is worth it for your cash flow; just make it consciously — the payment terms guide on ChairManufacturer.net is a useful reference for the standard structures buyers and factories reach for, the same way you weigh the cost questions on a private-label program.
If you are structuring a first order, tell the export desk your order size and preferred terms and we will respond with a structure and a proforma rather than a slogan. Start from the executive range or the mesh office chairs, and see how inspection milestones slot into the OEM/ODM workflow.