Payment terms: what each structure protects
Why the deposit exists — and what it actually buys you
A 30% deposit is not a gesture of trust. It is the money that pays for steel, the hydraulic package and the workshop time before the machine exists. Without it, no factory starts cutting plate for a buyer they have never met.
The useful question is not “should I pay a deposit”, but “what do I get at each payment milestone, and what can I do if the milestone is not met”.
The three structures you will be offered
| Structure | Protects | Cost / risk |
|---|---|---|
| 30% deposit, 70% before loading | Supplier gets working capital; buyer holds the balance until the machine is finished and inspected | Buyer carries the deposit risk if the supplier fails |
| Letter of credit at sight | Both sides — the bank pays only against documents | Bank charges, more paperwork, slower start |
| 100% in advance | Supplier only | Avoid unless the order is small or the relationship is long |
The 70% moment is the whole negotiation
Everything important happens at the balance payment. That is the point where the machine exists, the buyer has leverage, and the supplier has costs sunk. Three things should be true before the balance is transferred:
- The inspection report exists and shows a machine that runs, to a measurable standard.
- The documents are listed, with dates, not promised.
- The shipping date is booked, not “soon”.
A supplier who asks for the balance before the inspection is asking you to give up your only leverage in the transaction. A supplier who is confident in the machine will not mind the sequence.
What protects a buyer paying in advance
- Written scope. Model, configuration, options, packing, documents — itemised, before the deposit.
- A named factory. If the supplier will not tell you which factory builds it, you have no way to verify anything.
- A milestone schedule. Deposit → production photos → inspection → balance → loading photos → documents.
- A contract with the dispute route written in. Not a proforma invoice with a signature — a contract that says what happens if the machine is late or wrong.
The payment fraud that catches experienced buyers
The most common loss in this trade is not a bad machine. It is a bank account change.
Partway through an order, an email arrives — apparently from the supplier, with the right letterhead and the right order number — saying the company has changed banks and the balance should go to a new account. The account belongs to someone else.
The only defence: treat any bank detail change as fraud until confirmed by a second channel. Call the number you already had. Do not reply to the email. Do not use the number in the new email.
What we do, specifically
- 30% deposit to schedule production, 70% before loading, after the inspection report is approved.
- Bank details are on the signed contract, and any change is confirmed by a phone call to a number you already have.
- Inspection photographs and video are sent before the balance is requested — not after.
Frequently asked questions
Can I pay by letter of credit?
Yes, for orders where the bank cost is justified — typically larger orders or first transactions with a new supplier. It protects both sides, but adds paperwork and a week or two before production starts.
Can the deposit be lower?
Sometimes, for standard models with a short lead time. It is a commercial question, not a fixed rule — but a supplier who accepts a very low deposit is also a supplier with less committed to your order.
What currency?
USD is standard. EUR is possible. The currency and the exchange-rate basis should be written into the contract, not agreed verbally.
What if the machine is late?
Only a contract answers that. Ask for the delay clause before you sign — not after the ship has sailed without your container.
Let’s put the right machine to work.
Tell us your material, required output and destination. We’ll discuss a suitable configuration with you.