The default cabinet payment terms in China trade are 30% on order and 70% against a copy of the bill of lading. It is the structure almost every factory quotes, and it is the structure that leaves a buyer with no lever at the exact moment one matters. A deposit is not a down payment on goods. It buys three things: a slot on a production calendar, the material for that run, and a place in the queue when something goes wrong. Judge any set of cabinet payment terms by whether it delivers those three, not by whether the percentage is low.
We ask for 40%, which is above the market default. The reason is not that the work costs more up front. It is that 40% is what we can defend with a written production slot before the money moves, and a slot confirmed in writing is worth more to a project than a 10-point smaller deposit and a date that exists only in a chat log.
What cabinet payment terms look like in practice
Three structures dominate, and they map to how well the two sides know each other.
| Structure | Where it appears | What it means |
|---|---|---|
| 30% deposit, 70% against B/L copy | The default for established relationships | Factory funds about a third of the run; buyer carries the rest of the risk until documents appear |
| 50/50 | First orders, heavy customisation, large material pre-purchase | Factory will not fund a stranger's tooling and material |
| 30/40/30 | Orders above roughly USD 100,000 | Deposit, then mid-production, then pre-shipment, with inspection gates between |
| 100% in advance | Should be refused | Removes every lever the buyer has |
The 30/70 split is common. It is not standard in any legal sense, and the factories that refuse anything else are often the ones least able to survive a post-shipment inspection. Treat the structure as a signal about how confident a supplier is in its own output, not as a fixed rule of the trade.
The problem with 30/70 against a B/L copy
The bill of lading is the document that lets someone collect the container at the destination port. A copy is not that document. So the practical sequence under 30/70 against a copy is: pay 70% of the order, receive an image of a document, and then wait.
At that point the buyer holds no lever. The goods are built, the container is sealed, the balance is gone, and the only remaining remedy is a dispute across borders that costs more than most orders are worth.
Two numbers make this less abstract. Across 47 supplier checks run in early 2026, 19% listed a bank account in a different name from the registered company. And in one sourcing firm's review of 1,200 deals, buyers who skipped account verification on a first order lost an average of USD 11,800 to misdirected wires. Business email compromise is not an exotic risk in this trade; it is a routine one, and it targets the payment instruction email, not the factory.
None of that makes the factory dishonest. It makes the structure fragile.
What a deposit should actually buy
A deposit is working capital handed over before anything exists. Most sets of cabinet payment terms treat it as a down payment on goods, which is why they are argued over as a percentage. It should buy three specific things instead, and a supplier who cannot name all three in writing is asking for trust instead of offering a mechanism.
A dated slot, confirmed before the money moves. Not a lead time in weeks. A start date on a production calendar, in writing, with the consequence of missing it stated in the same document. If the slot is confirmed only after the deposit lands, the buyer has bought nothing but a place in a queue that was never defined.
Material allocated to that run. Panel, edge banding, hardware, and the finish batch are bought against a specific order. A deposit is what makes that purchase possible. Ask which materials are reserved and when they arrive, because a factory that cannot answer is a factory that buys material after the order starts, and that is where lead times quietly move.
A queue position that survives a problem. When a run needs rework, the orders that already have a slot get rebuilt first. A deposit is what puts an order in that group.
Why we ask for 40%, and what changes at 40%
Forty percent is not a marketing number. It is the point at which three commitments become possible at once.
The production slot is confirmed in writing before the deposit is taken, and that line sits in the contract rather than in a message thread. Production is counted from approved drawings, not from the deposit, so the clock does not start while the client is still revising. The drawing round is free and revisions are free until the production list is locked. A 3D layout and a per-linear-foot figure come back within one business day with no deposit needed to start, and a factory visit needs no deposit either.
Set against that, 40% is the price of a date. On a kitchen that runs 10-14 days from frozen drawings, or a closet programme at 12-16 days, the failure mode that actually hurts a project is not a few points of deposit. It is a container that arrives after the installation crew has been booked.
There is a second reason, and it is less flattering to the buyer. A supplier who asks for 30% and cannot show a written slot has priced the deposit to win the order, not to hold the date.
Where an L/C earns its fee, and where it does not
A letter of credit is a bank undertaking to pay when documents match the credit terms exactly. It is the right instrument for large first orders with a supplier nobody has tested, and the wrong one for a small reorder.
What it costs: roughly 0.5% to 2% of order value in bank charges, issued at 0.1-0.4% with a minimum, plus document examination at USD 100-300 per presentation, a discrepancy fee of USD 80-150 for each mismatch, amendment fees, and confirmation fees where a second bank is involved. On a USD 200,000 credit, total banking cost typically lands between USD 1,500 and USD 5,000.
What it buys, and what it does not: an L/C protects against non-shipment and against document fraud. It does not protect against quality. The bank examines documents, never goods, and industry estimates put the share of presentations carrying at least one discrepancy at 10-20%. A bill of lading reading Shanghai against a credit requiring Shanghai Port is enough to stop payment on a container that has already sailed. An inspection certificate named inside the credit is what closes the quality gap, and it has to be written into the credit before it is issued.
The practical threshold most sourcing firms use is USD 50,000: below it, T/T with an inspection gate is cheaper than the L/C fees. Above it, with a new supplier, the bank guarantee is the cheaper of the two risks.
Three cabinet payment terms to put in the purchase order
Split the balance into two tranches. 30/40/30 outperforms 30/70 because the final third stays in play until a pre-shipment inspection has passed. On a USD 100,000 order that keeps USD 30,000 of leverage alive at the dock instead of surrendering it.
Name the inspection gate that releases the balance. A passed pre-shipment inspection, a container loading supervision with the seal number matched to the bill of lading, or both. Write the release condition into the payment clause, not into a side email.
Verify the account before the first wire, in a channel that is not email. Call the number on the factory's registered website, confirm the beneficiary name matches the contracting entity, and treat any mid-order change of bank details as a fraud attempt until proven otherwise.
What to ask any factory, including us
Five questions, and the answers are checkable.
Ask for the production slot in writing before paying anything, with a start date and the consequence of missing it. Ask what material is allocated to the order and when it lands. Ask what the balance release condition is, and whether an inspection report can be named in it. Ask for the beneficiary account name in a document that also carries the company registration number. And ask what happens to the deposit if the drawings never reach approval.
A factory that answers all five has a payment process. A factory that answers three has a payment preference.
FAQ
What are standard cabinet payment terms from a Chinese factory?
The common structure is 30% deposit on order confirmation and 70% against a copy of the bill of lading before shipment. First orders, heavily customised work and large material pre-purchases often shift to 50/50. Orders above roughly USD 100,000 are frequently structured as 30/40/30, with the final third released after a pre-shipment inspection. None of these is a legal standard; they are conventions that allocate risk differently.
Is a 40% deposit too high for a cabinet order?
It is above the 30% default, so it is a fair question to ask. The test is not the percentage but what the deposit buys. Forty percent is defensible where it comes with a production slot confirmed in writing before payment, material allocated to the run, and a stated consequence for a missed date. It is not defensible where it buys a queue position nobody has defined. Ask for the written slot before judging the number.
Should I use a letter of credit for a cabinet order?
It depends on two things: order size and whether the supplier has been tested. Above roughly USD 50,000 with a new supplier, an irrevocable L/C at sight is usually worth the 0.5-2% in bank fees. Below that, T/T with a pre-shipment inspection gate is cheaper and nearly as protective. An L/C protects against non-shipment and document fraud, not against quality, so name an inspection certificate inside the credit or the quality risk stays with the buyer.
What is wrong with paying 70% against a copy of the bill of lading?
A copy of the bill of lading does not let anyone collect the container. Once the 70% has been wired, the goods are built, the container is sealed and the buyer holds no lever until documents appear. The structural weakness is not that factories are dishonest; it is that the buyer has surrendered every remedy at the moment a remedy would still be useful.
How do I verify a supplier's bank account before paying a deposit?
Use a channel that is not email. Call the number published on the factory's registered website, confirm the beneficiary name matches the contracting entity and the company registration number, and treat any change of bank details mid-order as a fraud attempt until independently confirmed. In one 2026 review of 47 supplier checks, 19% listed an account name that did not match the registered company.
When does production actually start on a cabinet order?
From approved drawings, not from the deposit. That distinction matters because the drawing round is where timelines are lost, and a supplier whose clock starts at payment has an incentive to push the client through approval. On our own runs, kitchens and vanities take 10-14 days from frozen drawings and closets 12-16 days, and revisions stay free until the production list is locked.
