Chair Order Payment Terms: Deposits, T/T and L/C
Published by JP · Dining chair studio in Foshan, China
A chair order from a Chinese factory is usually paid for before you touch the goods, so the payment terms carry most of the risk in the deal. Structured well, your deposit buys material, the balance follows a passed inspection, and both sides stay covered. Structured badly, you wire five figures against a PDF quotation. This guide covers the structures Foshan factories actually offer, what each one costs you, and how to write terms that protect your money on a commercial restaurant chair order.
1. The three payment structures you will be offered
Almost every quotation you receive will use one of three mechanisms. T/T — a plain bank wire — is the default: typically 30 percent on order and 70 percent before shipment. It is fast, cheap and almost entirely buyer-financed. A letter of credit at sight substitutes a bank undertaking for trust: the bank releases funds against documents, and both sides give up some control in exchange for security. Escrow, whether through a platform such as Alibaba Trade Assurance or a payment processor, holds your money with a third party until agreed milestones are met — the usual choice for a first small order. Each mechanism shifts risk differently, so weigh the cost of the structure against the value of the order instead of defaulting to whatever the iron chair quotation happens to print.
2. What the deposit actually funds
A 30 percent deposit is normal on stock and lightly customised models; 50 percent is common on fully custom chairs, because the factory is buying material against a design only you will use. That money is not a fee — it pays for kiln-dried hardwood or steel tube, foam blocks and fabric yardage, plus pattern making and any tooling. Fabric and leather mills frequently demand payment up front themselves, which is exactly why a custom solid wood chair order asks for a larger deposit than a catalogue model. Ask what the deposit buys and whether material is ordered only after it clears. Be sceptical of a zero-deposit offer: either the cost is buried in the unit price, or the chairs are not yet allocated to you.
3. Staging the balance against production milestones
Above roughly one container, replace the flat 30/70 split with a milestone schedule. A workable pattern is 30 percent to start, 40 percent when production and packing evidence are shared, and 30 percent against a passed inspection plus a copy of the bill of lading. The value of the pattern is that every tranche is tied to a document you can verify: material-in photos, a weld or pre-assembly shot, a packing list, container-loading photos. On a mixed order of bar chairs and dining models, it also lets you release money per batch rather than per shipment. Whatever you agree, hold back a final tranche against the bill of lading — never against a promise — and repeat the schedule in the proforma invoice.
4. Letters of credit: when the cost is worth it
An L/C at sight costs roughly 0.5 to 1.5 percent of order value, plus opening, amendment and discrepancy fees. On a US$30,000 order that is a few hundred dollars — cheap insurance if the supplier is new to you, and pure overhead if you have shipped with them four times. If you use one, make every field match the order exactly: description, quantity and tolerance, latest shipment date, whether partial shipment is allowed, and the document list. Discrepancies are where the money goes, and a misspelled model code can cost more than the credit itself. Confirm the issuing and advising banks are acceptable to the supplier before you open it, and if you are buying stainless steel chairs for a hotel project, consider a confirmed credit on the first order.
5. Red flags that should stop the transfer
Most importers who lose money on furniture do not lose it to a bad product; they lose it to a wire that should never have been sent. Refuse any request to pay a personal account rather than the company account named on the contract. Treat an emailed change of bank details as fraud until you confirm it by voice with a contact you already knew — that is the single most common attack. Be wary of 100 percent payment up front, of urgency built around a closing container, and of a quotation well below the market: a price that far below the others is usually a thinner frame or less foam, not a bargain. A factory that will not show you the line or accept third-party inspection is telling you something. Our Foshan studio opens the workshop and the sample room before you commit.
6. What to put in writing
Terms only protect you if they are documented. The purchase order should state the payment schedule with each percentage and its trigger document, the currency, and who pays bank charges. Add the inspection standard and the remedy when a re-inspection fails — commonly ISO 2859-1 level II sampling, with major defects capped at 2.5 percent. Define what happens on a late shipment or a defect claim: credit note, replacement in the next container, or funds released only after repair. Note the quotation validity, typically 30 days, and how a price revision is triggered. If you paid for moulds or tooling, record who owns them, and confirm that the approved sample is the reference for every later batch. Our OEM and ODM team works to buyer-authored terms, and the chair catalogue shows what each model translates to in unit cost.
Conclusion
Payment terms are a risk-sharing tool, not paperwork. For a first small order, escrow or a platform-protected payment is the cheapest way to test a factory. Once the relationship works, move to T/T with a 30 percent deposit and a final tranche released against the bill of lading. Reserve letters of credit for large or first-time orders where the bank's involvement earns its fee. Whatever you choose, the discipline is the same: pay against verifiable documents, never against urgency. Tell us your seat count, mix and destination and we will send a quotation that sets out the schedule, the inspection clause and the lead time in one document.
Related: Importing Dining Chairs from China · Chair Sample Approval Checklist
Models we build for this
Factory-direct pricing, custom finish and fabric, MOQ from a few pieces.
