Payment terms for chair orders: T/T, L/C and deposits

The standard deal, and why it looks the way it does

The default structure in the chair trade is a telegraphic transfer split: 30% deposit on order confirmation, 70% balance before shipment — “30/70 T/T” on every quote sheet you will ever see. It is not arbitrary. The deposit covers the factory’s material exposure (fabric, foam, components bought specifically for your order), and the balance-before-release protects the factory from building a container of goods for a buyer who disappears. Variants exist around the same logic: 50/50 on small or heavily customised orders where material cost is front-loaded, and balance-against-documents for established relationships.

Notice what the default does not contain: any reference to quality. A bare 30/70 with the balance due “before shipment” means you pay in full while the goods sit in the factory’s warehouse, sight unseen. Everything useful you can negotiate in payment terms amounts to attaching conditions to that 70%.

Tie the balance to inspection, in writing

The single highest-value clause available to a chair buyer costs nothing: balance payable after a passed pre-shipment inspection, against the inspection report. The inspection itself is covered in our inspection guide; the payment-terms point is sequencing. Pay the 70% before the inspection and the inspection becomes advisory — you can document defects you have already bought. Pay after, and the report has teeth: rework happens, because shipment and payment both wait for it.

Factories accept this far more readily than new buyers expect, because it is symmetrical — the factory still holds the goods until paid. Resistance to inspection-conditioned balance payments is itself information, the same way resistance to document requests is in factory verification. First-time buyers consistently report pre-purchase anxiety about exactly this — payment safety and whether the goods will match the listing — and this clause is the structural answer to both at once.

Letters of credit: when the paperwork earns its cost

A letter of credit replaces trust with documents: your bank commits to pay the factory’s bank when the factory presents papers that exactly match the credit’s terms — typically the bill of lading, invoice, packing list, and, if you write it in, a third-party inspection certificate. Done properly, neither side can be left fully exposed: the factory knows payment is bank-guaranteed, you know payment only triggers on conforming documents.

The honest cost-benefit: banks charge issuance and negotiation fees at both ends, factories pad quotes to cover the hassle and the discrepancy risk, and small Chinese factories often cannot or will not work under L/C at all — their banks and back offices are not set up for it. As a working rule from my years on both sides of these deals: below roughly the value of a single container, the fees and friction usually outweigh the protection and a well-structured T/T with inspection conditions serves better; for multi-container orders, project quantities (cinema seating tenders live here), or a first transaction with a counterparty you could not absorb losing, the L/C earns its keep. If you do use one, write the inspection certificate into the required documents — that is what turns it from a payment instrument into a quality instrument.

Marketplace escrow, cards, and the channels in between

Alibaba’s Trade Assurance wraps an escrow-like layer around marketplace orders: pay through the platform, and the order terms — product specs, ship date — become the basis for a dispute claim adjudicated by the platform. For sample orders and small first transactions it is genuinely useful, and I would default to it at that scale. Its limits show at container scale: claim outcomes depend on what the order form actually specified (vague spec, weak claim — the same written-spec discipline from the sampling guide applies), refund caps and timelines are platform policy rather than contract law, and plenty of production-scale business happens off-platform where the wrap does not reach.

Two channels to treat as red flags in a production context: full payment to a personal account (not the company on the licence — walk away), and Western Union or similar irrevocable cash transfer for anything beyond a trivial sample. Neither gives you a counterparty you can pursue. A wire to the wrong entity also quietly voids your leverage even when nothing fraudulent is happening — if the contract names the factory and the money went to a trader’s account, untangling responsibility later is miserable.

Deposits, currency, and the boring clauses that save deals

Three smaller points worth writing down before the first wire. First, deposit size is negotiable in both directions: a factory asking 50%+ on a standard model with no custom tooling is shifting its working-capital problem to you; conversely, custom moulds or printed fabrics legitimately justify heavier deposits, and sometimes a separate tooling payment with ownership terms attached. Second, name the currency and who eats bank charges — USD is the trade default; “balance net of all bank fees” avoids a $60 argument on every payment. Third, put the payment schedule in the same document as the spec and inspection terms, signed and chopped, not scattered across chat messages. When something goes wrong, the chat-log version of your agreement is worth roughly what it cost to type.

None of this is exotic. The factories worth working with have seen every clause above hundreds of times, and agreeing them takes a day. The buyers who skip that day are the ones whose stories fill the forums the rest of this site keeps citing.