Buyers spend weeks comparing specifications and about ten minutes on the payment clause. Then the project goes wrong in a way that has nothing to do with the equipment: a deposit paid to an account that turns out to belong to a trading company, a letter of credit that expires two weeks before the goods are ready, a shipment held at origin because a certificate names the model slightly differently from the invoice.<\/p>\n
Payment terms are where a kitchen equipment import is actually won or lost. They decide who carries the risk while USD 200,000 of stainless steel is being built on the other side of the world, and they decide whether your money is recoverable if something goes wrong. This guide covers the three methods that are genuinely used, what each one costs, what a workable letter of credit for kitchen equipment must say, and the contract lines that protect a deposit.<\/p>\n
Three, in practice.<\/p>\n
T\/T (telegraphic transfer)<\/strong> is the default for the majority of commercial kitchen equipment orders below roughly USD 150,000. It is a plain bank wire, split into tranches. It is fast, cheap and completely dependent on the supplier being who they say they are \u2014 which is why establishing whether you are dealing with an actual factory or a trading company belongs before the first wire, not after; our list of the principales fabricantes de equipos de cocina comercial en China<\/a> is a reasonable starting point for that check.<\/p>\n Documentary credit (L\/C)<\/strong> is the instrument for larger projects, for first orders with an unfamiliar supplier, and for the many countries where the central bank or the import licence regime simply requires one. A bank, not your supplier, becomes obliged to pay, provided documents comply.<\/p>\n Documentary collection (D\/P or D\/A)<\/strong> sits between the two. The bank handles the documents but guarantees nothing. It is cheaper than an L\/C and gives more control than an open T\/T.<\/p>\n Two methods you should decline. Open account<\/strong> (goods first, payment later) is not something a Chinese factory will offer a new overseas buyer, and if it is offered, ask why. 100% advance payment<\/strong> transfers every scrap of risk to you and removes the supplier\u2019s incentive to hit the delivery date; there is no order size at which this is a reasonable request.<\/p>\n The standard structure is 30% deposit with the order and 70% before shipment, usually against a copy bill of lading. The proportions are not arbitrary. The 30% roughly covers the supplier\u2019s raw material purchase and mould or fixture setup, which is why suppliers resist going much below it on custom fabrication. The 70% is the buyer\u2019s leverage: it is not released until there is evidence the goods exist and are on their way.<\/p>\n On larger or longer projects, a three-way split is better for both sides:<\/p>\n The single most valuable change most buyers can make is to tie each tranche to a verifiable event<\/em> rather than a date. \u00ab40% on 15 October\u00bb pays for a calendar page. \u00ab40% within five working days of a passed pre-shipment inspection report\u00bb pays for finished goods.<\/p>\n Payment milestones also have to be realistic about production time. A typical build cycle for made-to-order commercial kitchen equipment runs 25-45 days ex-factory, against 60-90 days when an order is placed through an intermediary who has to buy it in. If your second tranche is scheduled at day 30 and the true cycle is 75 days, you have written a payment schedule that will be renegotiated mid-project, which is the worst time to renegotiate anything.<\/p>\n Documentary credits are governed by the ICC\u2019s UCP 600<\/strong>, con ISBP 821<\/strong> setting out how banks examine documents and the eUCP<\/strong> supplement covering electronic presentation. The ICC Banking Commission has confirmed it is not currently revising UCP 600 or updating ISBP 821, so these remain the operative rules in 2026.<\/p>\n What an L\/C does: it replaces your supplier\u2019s credit risk with a bank\u2019s. Once documents comply, the issuing bank must pay, regardless of any dispute between you and the seller.<\/p>\n What it does lo mismo<\/em> do, and this is where buyers are routinely surprised: banks deal in documents, not in goods.<\/strong> A compliant document set gets paid even if the equipment inside the container is the wrong voltage. An L\/C protects you against non-shipment and against document fraud. It does not protect you against poor quality. Only inspection does that \u2014 which is why the pre-shipment inspection certificate should be a required document under the credit, and why supplier due diligence still matters as much as it does in our guide to finding and vetting kitchen equipment suppliers<\/a>.<\/p>\n ICC estimates have long put the proportion of documentary credit presentations refused on first submission somewhere in the region of 60-75%, with transport documents, commercial invoices and insurance documents accounting for the largest shares of the defects. That is not a rare accident; it is the normal condition of the instrument. Each refusal costs a discrepancy fee, and more importantly, days.<\/p>\n The fix is mundane and effective: a pre-presentation audit, in which someone checks the draft documents against the credit line by line before anything goes to the bank. Published estimates of the improvement are dramatic \u2014 one widely cited figure puts discrepancy rates falling from around 68% to around 12% where exporters audit before presenting.<\/p>\n In practice this means the seller sends you draft copies of the invoice, packing list, bill of lading and every certificate for approval antes<\/em> the originals are issued. On our own export shipments this draft-approval step is standard, alongside a check that the model designations on the nameplate, packing list, commercial invoice and bill of lading are character-for-character identical \u2014 the mismatch that most often turns a clean presentation into a refused one. Where certification documents are involved, our guide to kitchen equipment certifications<\/a> sets out which marks apply to which market, so you do not name an impossible certificate in the credit.<\/p>\n Documentary collections run under the ICC\u2019s URC 522<\/strong>. Under D\/P (documents against payment)<\/strong> the seller ships, then sends documents through the banking channel; you receive the bill of lading only when you pay. Under D\/A (documents against acceptance)<\/strong> you receive documents against accepting a time draft, paying at 30, 60 or 90 days.<\/p>\n Collections cost a fraction of an L\/C and keep the bill of lading out of your hands until payment. The gap is that no bank undertakes to pay or to be paid. If the buyer walks away, the seller has a container sitting at destination. That asymmetry is why sellers accept D\/P mainly from buyers they already know.<\/p>\n Indicative 2026 bank charges. These vary widely by bank and country, so treat them as a planning range and get your own bank\u2019s schedule in writing:<\/p>\n A rough guide: an L\/C on a USD 200,000 order commonly lands between USD 800 and USD 2,500 all-in before confirmation. Against a project of that size, it is cheap. Against a USD 25,000 top-up order, it is not, which is why small repeat orders migrate to T\/T once trust is established.<\/p>\nT\/T: what the 30\/70 split is really for<\/h2>\n
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Letter of credit: what UCP 600 protects, and what it does not<\/h2>\n
What a workable L\/C for kitchen equipment must say<\/h3>\n
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Discrepancies: why most first presentations are refused<\/h3>\n
D\/P and D\/A collections: the middle option<\/h2>\n
What do payment terms cost?<\/h2>\n
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\n \nCargo<\/th>\n Typical basis<\/th>\n Indicative cost<\/th>\n<\/tr>\n<\/thead>\n \n Outward T\/T<\/td>\n Per transfer<\/td>\n USD 15 \u2013 50, plus USD 15 \u2013 30 correspondent charges<\/td>\n<\/tr>\n \n L\/C issuance<\/td>\n Per quarter on credit value<\/td>\n 0.10 \u2013 0.25%, minimum USD 50 \u2013 150<\/td>\n<\/tr>\n \n L\/C advising<\/td>\n Flat<\/td>\n USD 50 \u2013 100<\/td>\n<\/tr>\n \n Confirmation<\/td>\n Per annum, by country risk<\/td>\n 0.5 \u2013 2.0%<\/td>\n<\/tr>\n \n Negotiation \/ handling<\/td>\n On drawing value<\/td>\n 0.10 \u2013 0.15%<\/td>\n<\/tr>\n \n Discrepancy fee<\/td>\n Per refused presentation<\/td>\n USD 50 \u2013 100<\/td>\n<\/tr>\n \n Amendment<\/td>\n Per amendment<\/td>\n USD 30 \u2013 80<\/td>\n<\/tr>\n \n Documentary collection (D\/P)<\/td>\n Per set<\/td>\n USD 40 \u2013 120<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Matching payment terms to Incoterms and to your schedule<\/h2>\n