Payment Structure Protects Both Buyer and Factory
For international buyers placing OEM furniture orders in Foshan, the payment terms are as important as the unit price. A fair structure gives the factory working capital for materials while protecting the buyer from delivery risk. The right terms depend on order size, relationship history, and whether the order is custom or stock.
T/T (Telegraphic Transfer) — The Industry Standard
30% deposit with the purchase order and 70% balance before shipment is the most common T/T structure for hotel furniture orders. The deposit covers raw materials — timber, foam, fabric, metal — which the factory must purchase upfront. The balance is paid after the buyer or third-party inspector confirms the shipment is ready. Some buyers negotiate 30% deposit, 60% against shipping documents, and 10% after delivery, but this is uncommon for first orders under $50,000.
L/C (Letter of Credit) — When the Order Is Large
An irrevocable L/C at sight is the safest instrument for orders above $100,000. The bank guarantees payment when the factory presents compliant shipping documents. The buyer’s risk shifts from the factory to document accuracy, so the L/C terms must precisely match the purchase order: HS codes, product descriptions, delivery date, and port of loading. An L/C typically costs 0.5–2% of the order value in bank fees split between buyer and supplier.
Deposit and Milestone Structures
For large hotel projects with multiple containers, milestone payments reduce exposure on both sides. A common structure is 20% deposit, 30% at production completion with photo evidence, 30% after inspection approval, and 20% before shipment. This keeps the factory funded while giving the buyer checkpoints before releasing additional funds.
Trade Finance and Credit Insurance
Buyers financing a full hotel FF&E package may use supplier credit or trade finance facilities. Chinese export credit insurance (Sinosure) can cover factory receivables, which sometimes allows more flexible payment terms. For repeat buyers, open account terms (payment 30–60 days after shipment) may become available after 3–5 successfully completed orders.
Red Flags and Protection
- Never pay 100% upfront to a new supplier
- Do not release the balance without inspection photos or a third-party report
- Verify the factory’s business license and export records before large deposits
- Keep all payment receipts and correspondence in one organized file for the project
- For first orders, consider a trial container with tighter payment milestones before committing to a full hotel package
Request a sample payment structure for your next hotel furniture order.