When ordering outdoor furniture directly from a factory, understanding the typical payment terms is crucial for a smooth transaction. Unlike retail purchases, factory direct orders often involve customized products and larger quantities, which influences the payment structure.

The most common payment term is a split payment, typically 30% to 50% deposit upfront with the balance paid before shipment. The deposit, often paid via bank transfer (T/T), secures your order and initiates production. The remaining balance is usually required after production is complete and before the goods are loaded for shipping. For established business relationships, some factories may offer more flexible terms, such as 30% deposit, 70% against copy of Bill of Lading.

International trade terms (Incoterms) like FOB (Free On Board) or EXW (Ex Works) are standard. Under FOB, your payment responsibility typically ends once goods are loaded at the origin port. For EXW, payment is usually finalized when the goods are ready for pickup at the factory gate.

For smaller initial orders, factories might require 100% payment in advance. Letters of Credit (L/C) are common for large, first-time orders, providing security for both buyer and seller. Always request a proforma invoice detailing all costs and the payment schedule. Clear communication and a written contract specifying milestones, quality checks, and payment deadlines are essential to protect your investment and ensure a successful partnership with the manufacturer.