Payment terms look like paperwork until the money moves. In practice they decide three things that matter more than the unit price: how much of your budget is at risk before you have seen a finished fixture, when you are allowed to look at the goods, and what happens if the batch is wrong. A supplier quoting ten per cent less but asking for full payment up front is not cheaper — they are pricing in a risk you carry instead of them.
This guide is for buyers importing decorative lighting from China on project orders — hotel, restaurant and lobby fixtures, usually quoted FOB China port with 30 to 45 days of production. It covers the structures you will be offered, what each means in money and days, and the documents that should release your balance.
Payment terms are part of the product, not the paperwork
A lighting order runs quotation, deposit, production, verification, shipment. What matters is where the payment trigger sits relative to verification. Pay the balance before anyone has looked at the goods and you have bought an argument, not a batch. Release it against an inspection report you control and you have bought leverage.
The usual objection — that it slows shipment — only holds if the inspection is not scheduled. Book it when production is confirmed complete, not when the goods are at the port.
The four structures you will be offered
Almost every lighting supplier in China works within four patterns, and each places a different amount of your money at risk for a different length of time.
100% T/T in advance
Standard for samples and first orders under roughly USD 2,000 — fast, no bank paperwork, and the only sensible option when the administration costs more than the shipment. Anything larger should not be paid this way unless you have a track record or an escrow arrangement.
30% deposit, 70% before shipment (T/T)
The default for project orders. The deposit buys materials and a slot on the line; the balance falls due when production is finished and packed. The weakness is that “before shipment” is undefined — it can mean before the container is loaded, or after. Write down what triggers it: completion of production, or your inspector’s passed report. Those two are days apart, and days are the difference between catching a problem and discovering it at your warehouse.
30/70 against an L/C at sight
A letter of credit substitutes the bank’s promise for your trust: the issuing bank pays against a document set, not against the goods. It suits orders above roughly USD 30,000 and first orders with an unknown supplier, and adds about USD 150 to 400 in bank charges plus a few days of document handling.
Deposit, then balance against inspection
The structure we recommend and the one buyers under-use. Deposit at order, inspection on completion, balance against the passed report, then shipment. It is the same cash split as 30/70 — only the release condition differs, and that condition is free. What the inspector should cover is set out in our pre-shipment inspection guide.
What 30/70 actually means on a lighting order
Take a USD 40,000 order of decorative fixtures at FOB China port. The 30% deposit is USD 12,000, wired when the supplier commits to buying crystal, brass stock, glass and the specific LED drivers your specification names. That money is spent inside the first two weeks — it is not a margin the supplier is holding.
The remaining USD 28,000 covers assembly, finishing, testing and packing labour, plus margin. That is the part worth keeping control of, because it is what buys a remedy if the finish is wrong or the glass arrives chipped. On custom work — a multi-tier lobby chandelier, or a run of banquet hall candle-arm fixtures — the deposit also covers drawings and jigs made before any unit can be assembled.
On a 35-day cycle your deposit is exposed for about five weeks and the balance for a few days, so the release condition on the balance is where most of the available protection sits.
L/C at sight: when it is worth the paperwork
A letter of credit is a document game. The bank does not examine your chandeliers; it examines whether the papers match the credit, which makes the document list the most important part of the transaction.
A typical set for lighting: commercial invoice, packing list, full set of bills of lading, insurance policy where the terms require the seller to arrange it, and a certificate of origin if your customs regime needs one. Certification documentation can be arranged per order and destination market — see how certification documentation is arranged and what an OEM buyer should check in a certificate before accepting it.
Three rules. Keep the description of goods short enough to reproduce exactly — a credit quoting your full specification invites a discrepancy on every line. Agree who bears the bank charges at each end. And send the supplier a draft for agreement before the credit is issued; most L/C problems come from a credit nobody showed the beneficiary.
The documents that should release your balance
Whatever structure you use, define the release set in writing on the purchase order. A working set for decorative lighting: completion notice with photographs of packed goods with your item numbers on the cartons; a packing list matching the approved pro-forma line by line; an inspection report from your inspector or the factory against your checklist; test readings for wiring and earthing; and approved-sample comparison photographs, so a finish drift is visible before the balance moves.
None of this costs money — only the willingness to write it down. The same document set feeds the forwarder’s booking, so it is worth agreeing before you settle on port delivery versus door-to-door.
Escrow and platform protection: read the release condition
Escrow beats a naked wire transfer for small orders and is worth using for the first transaction with any new supplier. But it protects only under the conditions written into it: coverage usually expires a fixed number of days after shipment — sometimes shorter than your production cycle — and typically covers non-delivery rather than specification disputes.
If the money releases on a tracking number rather than on delivery, you have escrow in name only. For larger project orders, a documented inspection condition on a normal T/T protects better than a platform deadline you did not choose.
How the terms should change with the order type
One structure for every order is a mistake, because the risk differs by case.
Sample orders. Paid up front in full, which is correct — administration costs more than the goods. What matters is whether the charge is credited against the production order; our approach is in the sample policy. Custom samples are charged rather than free, because a bespoke sample has no second buyer.
Custom and OEM work. Tooling and mould charges sit outside the unit price and are non-refundable, because they buy something that exists only for your design. Pay them against the tooling, not the first production run, and settle the OEM versus ODM route before quoting — it decides who owns the tooling.
Repeat orders. Once you have a history the terms should improve: lower deposit, or balance after delivery. If they do not, ask why.
Staged projects. Where a hotel order ships in phases, tie each payment to its phase rather than to the whole contract, so exposure stays proportional and you have somewhere to stop.
Six things to confirm before you wire a deposit
Most payment losses are not fraud in the dramatic sense. They are administrative gaps that become unrecoverable once the money has left.
1. Beneficiary name matches the quotation. A supplier quoting under one company name and asking for payment to another is normal in China, but it must be explained in writing before you pay.
2. Currency is stated. Quotations in USD should be paid in USD; an RMB request turns the exchange rate into a second negotiation. We quote on the PBOC mid-rate of the day and date it on the quotation.
3. Bank charges are allocated. A USD 40,000 wire can land USD 25 to 60 short after correspondent fees. Decide whose side pays and send the invoice amount plus fees if the full figure is required.
4. The balance trigger is written down. “Before shipment” is not a trigger. “Against the passed inspection report” is.
5. Change orders are priced before they are made. The commonest dispute in custom lighting is a specification change after sample approval. Agree that any change is quoted and accepted in writing first.
6. Shipping terms are settled. FOB China port versus delivered terms decides who insures the cargo and who carries the risk on the water, which interacts directly with when the balance falls due — see comparing freight quotes and using your own forwarder.
Four problems that cost buyers money
Wrong beneficiary, right bank. The commonest email-interception fraud in this trade: a message that looks exactly like the supplier’s, with new bank details, sent the day the deposit is due. Confirm any change of bank details on a second channel. Always.
Treating the T/T copy as a receipt. Your bank’s debit advice proves money left your account, not that it arrived. The supplier’s confirmation that funds have landed is what starts the clock.
Paying the balance to hit a shipping date. The container booking is not more important than the inspection. Take the three-day delay — a rejected batch at your warehouse costs weeks.
Skipping the insurance question. On FOB terms risk passes at the ship’s rail. If your forwarder has not placed cargo insurance, that exposure is yours from the port onwards.
How we structure payment
We work on 30% deposit and 70% balance against inspection and release for shipment, in USD, on the PBOC mid-rate of the quotation date stated on the quotation. Quotations cover product cost, export packing, quality control and delivery to the Chinese sea port; international freight, insurance, customs clearance, duties and destination charges are excluded, and the term is FOB China Port.
Sample charges are paid up front and credited against a confirmed production order; tooling for custom work is quoted separately. Balances are released against an inspection report the buyer has seen — ours, with timestamped photographs and test readings, or one from an inspector you appoint. Certification documentation can be arranged per order and destination market.
Production runs from our own facility in Guzhen with long-standing partner workshops and specialist subcontractors for glass and metal finishing; we have been at this since 2014 with more than 200 installed projects behind us. Warranty is one year, 90 days on glass, and covers manufacturing defects rather than lumen depreciation, which is normal for the category. Our ten-point checklist for choosing a lighting supplier covers the rest of the trade relationship.
If the order goes wrong
Keep the dispute inside the mechanism you built. If the balance is unpaid and the inspection has failed, no argument is needed — the report says what is wrong. If the balance is already paid, your remedy lives in the purchase order: the defect clause, the rework obligation, who bears re-inspection cost. Agree those before the order, not during the dispute.
The sequence that works: document with photographs, agree the remedy in writing, agree who pays for the fix, then re-inspect before shipment. Skipping the last step is how a corrected batch still arrives wrong.
Related reading
Useful when specifying as well as buying: hotel lobby lighting design, how many lumens a lobby needs, 2700K versus 3000K versus 4000K, sconce height and spacing and sconce versus pendant in corridors. Current pieces: hotel and banquet chandeliers, brass wall lights.
FAQ
What deposit should a first order with a Chinese lighting supplier carry?
Thirty per cent is standard for project orders and fair to both sides — it covers materials bought before assembly starts. Above roughly USD 30,000, or on any first order with no track record, an L/C at sight is worth the USD 150 to 400 in bank charges. Full payment in advance should be limited to samples and small orders.
Can I pay the balance after I receive the goods?
Occasionally, after several clean orders, but not on a first transaction — a supplier who has paid for materials, labour and packing cannot carry the whole order value through production and shipping. The workable middle position is balance against inspection: you see the goods and the report before the money moves.
Who pays the bank charges on a T/T?
Whoever the quotation says pays them, which is why it should be written down. Correspondent fees run USD 15 to 60 per transfer and are deducted in transit, so a USD 12,000 deposit can land as USD 11,960. If the full figure must arrive, send the invoice amount plus the fee.
Are tooling and mould charges refundable?
Usually not, and that is not a negotiating position — a mould made for your design has no second buyer, so the cost is sunk when it is cut. What is worth agreeing is that the tooling is yours, that it will not be used for another customer’s fixture, and that the unit price does not carry a tooling charge again on the repeat order.
What happens if my inspection fails and the balance is not yet paid?
That is the position you want to be in. The goods do not ship, the supplier reworks, and re-inspection follows, with the cost allocation agreed in the purchase order beforehand. The usual split is that the factory bears re-inspection when the failure comes from its own work, and the buyer bears it when the failure follows a specification change made after sample approval.