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Supplier Deposits and Payment Terms: Protecting Your Cash Flow

Almost every first order runs on the same terms: 30% deposit to start production, 70% balance before the goods ship. It sounds simple, but those terms decide how long your money is locked up, how much you risk if a supplier underdelivers, and whether a single order can strain your whole cash position. Understanding and negotiating them is one of the highest-leverage things an importer can do. This guide breaks down the common structures and how to make them work in your favour.

The standard 30/70 split

The typical arrangement is a 30% deposit paid up front, with the remaining 70% balance paid once production is finished. The deposit funds the supplier buying materials and committing factory time. The balance is your leverage: it is the money you still hold while the goods are being made, and the reason to hold it until you are satisfied the order is right.

When the balance is due matters most

The deposit percentage gets all the attention, but the timing of the balance is where your real exposure sits. There are two common versions, and they are not equal:

Balance before shipping: you pay the remaining 70% once production is done, before the goods leave the country. Standard, but it means you have paid in full before you have seen or received anything.
Balance on arrival or after inspection: you pay once the goods pass inspection or reach you. Much safer for you, and worth pushing for as the relationship builds.

Paying the balance against a clean inspection report, rather than a promise, is one of the most effective protections you can build into your terms.

The cash-flow gap this creates

Here is the part that catches new importers out. You pay the deposit at week zero and the balance a month or two later, but the goods still have to ship, clear customs, land, and sell before any money comes back. That gap between your cash going out and revenue coming in can easily run three to five months. During it, your working capital is fully committed and unavailable for anything else.

The peak cash you need is not the deposit. It is the full order cost plus freight and duty, all tied up at once before the first unit sells. Plan for that number, not the deposit.

How to negotiate better terms

Suppliers expect to negotiate, and terms usually soften as they learn you are reliable. Practical moves:

On repeat orders, ask to move part of the balance to after inspection or arrival.
Offer a slightly larger or guaranteed order in exchange for longer payment terms.
Use a letter of credit for large orders, so the bank releases funds only against shipping documents.
Keep every milestone and payment documented, so a request for better terms rests on a track record, not a favour.

Know exactly how much cash each order ties up. Our free landed cost calculator adds freight, duty and fees to show the true per-unit cost behind your deposit and balance. Open the free landed cost calculator

Common mistakes

Focusing on the deposit percentage while ignoring when the balance falls due.
Paying the full balance before any inspection on a new supplier.
Planning cash around the deposit rather than the full committed order cost.
Forgetting the months between final payment and first sale, when the money is simply gone.

The bottom line

Payment terms are a negotiation, not a fixed rule. Protect yourself by tying the balance to inspection or arrival where you can, and plan your cash around the full order cost rather than the deposit. The importers who stay solvent are the ones who respect how long their money is gone before it comes back.

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