Once your product is sampled and approved, the next practical question is how payment works. Custom manufacturing is not a retail transaction: the factory must buy cells and materials, open tooling and reserve production capacity, while the buyer wants assurance that goods will meet the approved sample. Payment terms are designed to balance these two needs, and a professional supplier makes them clear and predictable before any work begins.
This article explains the standard payment structure for OEM orders, how deposits and balances work, the role of T/T and letters of credit, and how sample fees are handled. Knowing these terms helps you plan your cash flow and negotiate with confidence.
Q: What is the standard payment structure for an OEM order?
The most common structure is a deposit plus a balance before shipment. A typical arrangement requires an initial deposit to start production, with the remaining balance paid once the goods are ready for shipment or against the shipping documents. This protects the factory, which needs funds to procure materials and schedule production, while giving the buyer a checkpoint: the balance is only due when the order is complete and inspected, so funds are not handed over blindly. The exact percentages are agreed in the proforma invoice before production starts.
Q: Why is a deposit required?
A deposit commits both sides and covers the factory's upfront costs. For a custom order, the supplier must reserve battery cells, components, packaging print runs and production line capacity before building anything. The deposit confirms your order is real and allows procurement to begin. It also gives you leverage in the schedule, because once the deposit is paid your order moves into the production queue rather than waiting in the quotation stage.
Q: How does T/T payment work?
T/T, or telegraphic transfer, is the standard bank transfer used in international manufacturing. The supplier provides its company bank details on the proforma invoice, and you transfer the deposit by T/T; the balance is likewise transferred before shipment. T/T is fast, widely accepted and transparent, and both sides receive bank records of the transfer. It is the most common method for OEM orders, especially for smaller and medium-sized buyers, and your bank will guide you through the international transfer process.
Q: When is a letter of credit used?
A letter of credit, or L/C, is typically used for larger orders where both buyer and supplier prefer bank-secured payment. In an L/C, the buyer's bank guarantees payment upon presentation of compliant shipping documents, which protects the supplier against non-payment and protects the buyer against payment before goods ship. L/C involves bank fees and document precision, so it is more common for high-value or long-running contracts than for first small orders. For most private-label orders, T/T deposit and balance is simpler and sufficient.
Q: How is the sample fee handled in relation to the production order?
Sample fees are usually paid separately when samples are ordered, because sampling happens before the production decision. As noted in the sampling process, many manufacturers credit or refund the sample fee against the first mass production order, treating it as an advance development cost. This is confirmed in writing during quoting. The important point is that sampling and production payments are tracked separately, so you can see exactly what was paid for samples versus what is due for the bulk order.
Q: When is the balance payment due?
The balance is typically due once production is complete and the order has passed inspection, and before the goods are released for shipment. In practice, the buyer is invited to inspect or receive inspection photos and a packing list, then pays the balance, after which the supplier arranges shipping and sends the documents. Some arrangements use the balance against copies of the shipping documents rather than before shipment, depending on the agreement. This checkpoint is what ensures you only release final funds once you know the goods are finished and up to standard.
Q: Can I pay by credit card or online payment platform?
For small sample fees, online payment platforms or card payment may be possible, but for production orders the standard is bank T/T because of the amounts involved and the record-keeping required. Large online platforms also charge significant fees and have limits that make them impractical for bulk manufacturing. Your account manager can advise on accepted methods, but planning for a bank transfer is the realistic expectation for a production order, and you should allow time for international transfers to clear.
Q: What about tooling or mold fees?
For fully custom projects that require a new mold, the tooling cost is usually quoted separately and paid before tooling begins, because it is a distinct investment from unit production. In many arrangements, tooling fees are either one-time charges or can be amortized into the unit price over a defined volume. Who owns the tooling after payment is completed is documented in the contract, as discussed in the OEM versus ODM article. Confirming tooling payment and ownership in writing avoids later disputes.
Q: What documentation supports my payment?
Every payment is backed by formal commercial documents: a proforma invoice at the start, a sales contract specifying price, quantity, terms and delivery, and a commercial invoice and packing list at shipment. For regulated markets, additional documents such as UN38.3 reports, MSDS and certificates of origin accompany the goods. Keeping these records ensures your payment is matched to a clear order, supports customs clearance, and provides a reference if any discrepancy arises. Zishine issues these documents for every order so that both payment and shipment are fully documented.
Q: How does Zishine structure payment for its clients?
Zishine works on clear, documented terms for every custom order. We issue a proforma invoice and sales contract before production, typically structured as a deposit to begin production and a balance due after inspection and before shipment, with T/T as the standard method and L/C available for larger framework agreements. Sample and tooling fees are stated separately, with any refund or credit terms confirmed in writing. This transparent structure means you know exactly what to pay, when to pay it, and what you receive in return, which is the foundation of a stable OEM partnership.
