articles — manufacture

Staged payments: the leverage structure of a China order.

Payment terms aren't accounting detail — they're the physics of who holds leverage at each moment of production. Structure them well and quality problems get fixed; structure them badly and they get shipped.

skeelx — 24 aug 2026 · 4 min read

Why deposits exist at all

A factory taking your order commits materials, line time and — for custom work — tooling before seeing full payment. The deposit covers their exposure to you; the balance covers your exposure to them. That symmetry is the whole design principle: at every point in production, each side should stand to lose something by walking away. Terms that break the symmetry — 100% upfront in either direction — put one party entirely at the other's mercy, which is why "full payment before production" from an unproven supplier is a red flag with an invoice attached.

The common structure, and what each tranche is for

Most custom orders run as tranches: a deposit that starts production, sometimes a mid-production payment on larger runs, and a balance held until release. The exact split is negotiated per order — what matters more than the percentages is what each payment is conditioned on. The deposit follows the signed specification and golden sample, not the promise of one. The balance follows a passed pre-shipment inspection — not the shipping deadline, not the factory's assurances, and never the pressure of your own launch date. Tooling is best paid as its own line with its own ownership terms.

deposit order signed mid-payment in production goods made, inspection pending factory ahead — leverage yours balance — after inspection released & shipped 100% upfront all leverage gone money you've paid value the factory has delivered bar heights illustrative
paid vs delivered — the balance closes the gap only after inspection

Spending the leverage deliberately

The balance payment is the only moment where a quality dispute is cheap to resolve: defects found before release get corrective action, because the factory's money is behind yours. The same defects found after payment are a favour request across an ocean. This is why inspection gates and payment gates belong in the same sentence in the purchase order — and why paying the balance early "to be nice" or to chase a deadline is donating the exact leverage the structure exists to give you.

Practicalities that keep it clean

Pay the entity named on the contract — a payee that doesn't match the counterparty is a conversation to have before money moves, not after. Keep the terms in the purchase order rather than folklore. And as trust builds over repeat orders, terms can relax by agreement — that's the relationship maturing, and it's worth more than any single negotiation.

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Condition the money on the evidence.

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