Deposit and Balance Payment
A common payment structure where the buyer pays part of the order upfront to start production and the rest before or after shipment.
TL;DR: Deposit and balance payment splits an order into two parts. The buyer pays a deposit to start production, then pays the remaining balance at a later stage agreed in the contract.
This structure is widely used in trade with China, usually with payment by T/T. The deposit covers the supplier’s material and setup costs, and it shows the buyer is committed. This matters most for custom goods, such as made-to-order mosaic murals, that cannot easily be sold to someone else.
Deposits are often in the range of 30 to 50 percent, though the exact split is a matter of negotiation. The timing of the balance varies. Some suppliers ask for it when production is finished and before the goods leave the factory. Others accept payment against a copy of the bill of lading, after the goods have shipped. In that case, the seller keeps the original bill of lading, or delays the telex release, until the balance arrives.
For the buyer, paying the balance after shipment gives more protection, since the goods are already on the way. Paying before shipment is easier to accept if you first get photos, videos or a third-party pre-shipment inspection.
Write the percentages, the trigger for each payment, and the currency into the proforma invoice or contract. Confirm the bank details for both payments in a trusted way. Compare with T/T, Telex Release and PI.