Payment terms on a bulk chair order

Payment terms decide two things on a chair order: how much cash you have out at once, and who carries the risk between the factory gate and your warehouse. Four structures cover practically every container we ship, and each one moves real money.

Published by JPChairs · Chair manufacturer in Foshan, China · 2026-10-17

The four structures actually used

On a factory-direct order, four payment patterns account for almost all shipments. The differences are not cosmetic: they move hundreds of dollars of bank fees and several days of port time.

• 30/70 T/T. 30 per cent deposit to release material, 70 per cent against a scanned copy of the bill of lading (B/L). Standard for orders between USD 8,000 and USD 60,000.
• 50/50 T/T. Half up front, half before loading. Used where frames or fabric are heavily customised, because a bespoke run cannot be resold if the buyer walks away.
• 100 per cent irrevocable L/C at sight. The bank pays against compliant documents. Typical above USD 50,000, and mandatory for some government and hotel-group tenders.
• L/C 30 or 60 days after B/L date. The supplier is paid 30 to 60 days after shipment, financing your inventory. Expect 0.8 to 1.5 per cent added to the unit price to cover the cost of money.

What the deposit really buys

A 30 per cent deposit is not margin. On a wood-frame chair it lands close to the material bill, which is why the deposit is due before the production slot is booked.

• Material is bought within 5 to 8 days of funds clearing: kiln-dried timber, steel tube, foam blocks, fabric rolls.
• Material is 55 to 70 per cent of ex-works cost on a solid wood dining chair, and 45 to 60 per cent on a metal frame.
• T/T clearing takes 1 to 3 banking days, plus one or two days across a public holiday.
• Sample fees of USD 80 to 250 are credited against the first bulk order rather than refunded in cash.
• Dyed-to-order fabric is non-refundable once cut. A mill lot is 300 to 500 m, so cancelling after dyeing forfeits the lot, not just a deposit.

Letter of credit: cost and calendar

An L/C buys document discipline, not product quality. Every check along the way carries a fee, and the smallest typo can delay payment a week.

• Issuance: 0.1 to 0.25 per cent of the credit value, minimum USD 80 to 150.
• Amendment: USD 60 to 120 each, plus 2 to 3 banking days. Two amendments on a first draft is normal and adds USD 150 to 250.
• Discrepancy: USD 80 to 150 charged to the beneficiary, often with 5 to 10 days of delay while the issuing bank decides.
• Presentation window: documents within 21 days of the B/L date, or the bank may refuse them.
• Expiry: set it at least 45 days past the agreed production finish date. A 32 to 38 day transit to Rotterdam plus 5 days of document handling leaves almost no slack otherwise.

Three defects cause most rejections: a misspelled beneficiary name, a quantity written without tolerance wording, and a shipment date that contradicts the latest shipment date field.

Currency, quote validity and who carries the FX move

Prices quoted in USD are conversions of an RMB cost base, so they have to expire. This is bookkeeping, not haggling.

• Validity 30 days or a 3 per cent move in USD/CNY, whichever comes first.
• A 2 per cent currency move on a USD 50,000 order is USD 1,000, roughly 8 to 12 per cent of the margin on that container.
• Freight is quoted separately and valid 14 days. A 40ft rate to Northern Europe can move 15 to 25 per cent in three weeks during peak booking season.
• Steel and foam re-price fastest: cold-rolled tube has swung 8 to 12 per cent quarter to quarter; high-resilience foam tracks oil with a 6 to 10 week lag.

Six lines worth putting in the contract

Almost every payment dispute we see comes from a line that was never written down.

• Define the shipment date. Ex-factory date or on-board (B/L) date? The gap between them is 3 to 7 days in a Shenzhen or Nansha booking.
• Late penalty. 0.5 per cent of order value per week, capped at 5 per cent. Nobody signs above that.
• Balance trigger. 70 per cent against a scanned B/L copy, originals couriered by DHL in 3 to 5 working days, or telex release to discharge the container 1 to 2 days faster.
• Inspection condition. Third-party report at AQL 2.5, or dated factory video of the sealed cartons, before the balance is released.
• Warranty start. 24 months for structural failure counted from the B/L date, not from delivery, so ocean transit does not eat your cover.
• Title and risk. On FOB terms risk passes at the ship's rail; everything after that is your marine insurance, at roughly 0.08 to 0.15 per cent of invoice value plus freight.

Standard terms like these apply to the commercial restaurant chairs, and the payment questions that come up most often are collected on the payment terms FAQ.