Payment terms decide who carries the risk at each step of an OEM order. Pay too much too early and you depend on the factory’s goodwill; ask for too much credit and a new supplier may decline or price the risk in. For private-label EV chargers, where printed housings, branded cables and packaging are made only for you, most buyers settle on a balance between the two. This article explains the common payment methods and how to tie them to project milestones. It is part of our complete guide to OEM and private-label EV chargers.
Banking rules and fees vary by country and bank, so confirm the details with your bank’s trade finance team before you commit.
The four main payment methods
The Trade Finance Guide from the US International Trade Administration describes the main methods used in international trade: cash in advance, letters of credit, documentary collections and open account. It is written for exporters, but reading it from the buyer’s side is just as useful.
| Method | How it works | Risk to buyer | Risk to supplier |
|---|---|---|---|
| Cash in advance (T/T) | Buyer wires money before shipment, often as a deposit plus balance | Higher: paid before goods arrive | Low |
| Letter of credit (L/C) | Buyer’s bank pays when the supplier presents documents that comply with the credit | Lower: payment only against agreed documents | Low, if documents comply |
| Documentary collection | Banks release shipping documents against payment or acceptance, without guaranteeing payment | Medium | Medium: buyer may refuse the documents |
| Open account | Goods ship first and the buyer pays later, for example after 30 to 90 days | Low | High |
T/T with a deposit: the usual starting point
Telegraphic transfer (T/T) is a bank wire. Most first OEM orders use a deposit and balance: a deposit when the order is confirmed, so the factory can buy materials and print your branded parts, and the balance before shipment. A 30/70 split is common, though the exact figure is a commercial choice between buyer and supplier.
The deposit covers things only you can use: housings in your colours, printed logos, branded cables and boxes, and manuals with your name. That is why factories ask for one, and why an order built mostly from standard parts may need less. Our article on EV charger MOQ explains how those set-up costs also shape minimum order quantities.
Linking the balance to milestones
- Golden sample signed off before mass production starts.
- Pre-shipment inspection passed; see our guide to pre-shipment inspection and AQL sampling.
- Copy of the bill of lading or other shipping document received, for FOB orders.
- Delivery to your door, for DDP orders, as agreed in the contract.
How payment lines up with shipment depends on the Incoterm; our comparison of FOB vs DDP shows who controls the goods at each stage.
Letters of credit and UCP 600
A letter of credit is an undertaking by the buyer’s bank to pay the supplier if specified documents are presented on time and match the credit’s terms. Most L/Cs are issued subject to UCP 600, the International Chamber of Commerce’s rules for documentary credits, which the ICC also publishes in its UCP 600 rulebook. Banks examine documents, not goods, so an L/C protects you only as far as the documents you ask for.
- Require an inspection certificate from a named third party, so the bank pays only once the lot has passed.
- Keep the document list short and precise; small mismatches cause discrepancies and delays.
- Allow realistic latest shipment and presentation dates.
- Ask your bank about issuing, amendment and discrepancy fees before choosing an L/C for a small order.
L/Cs suit larger orders and new relationships where both sides want a bank involved. For a pilot run of a few hundred units, the fees and paperwork can outweigh the benefit.
Protecting the payment itself
- Confirm the beneficiary name matches the company on your contract and pro forma invoice.
- Treat any email asking you to pay into a new bank account as suspicious, and confirm by phone using a number you already have.
- Keep proof of every payment and send it to your account contact.
- Put payment terms, currency and who pays which bank charges in the contract, not only in emails.
Agree the currency at the start. Quotes in US dollars are common for exports from China, but if you sell in euros, pounds or Canadian dollars, exchange rate moves between deposit and balance change your landed cost. Some buyers ask their bank about fixing the rate for the balance date.
Improving terms over time
Terms usually improve with history. After several orders without disputes, buyers often negotiate a smaller deposit, balance against shipping documents, or partial open account. A distributor with forecasts and repeat orders is in a stronger position than a one-off buyer, because the supplier can plan materials and capacity around it. If you plan to build a range over several years, our reseller and distributor program is a good place to start that conversation.
Starting an order with EVDANCE
EVDANCE offers private label from 50 units and ships FOB or DDP, so you can choose the Incoterm that fits your payment and import setup. Your dedicated account engineer stays with the project from sampling to mass production, which makes milestones such as sample approval and inspection easy to track. Contact our team to discuss terms for your first order.
Key Takeaways
- Cash in advance, letters of credit, documentary collections and open account spread risk differently between buyer and supplier.
- A T/T deposit and balance is common for first OEM orders because branded parts and packaging are made only for you.
- Letters of credit under UCP 600 pay against documents, so require an independent inspection certificate among them.
- Link the balance to a passed inspection and verify any change of bank details by phone.
Sources & Standards
- International Trade Administration — The Trade Finance Guide: A Quick Reference for U.S. Exporters
- International Chamber of Commerce (ICC Academy) — UCP 600: Uniform Rules for Documentary Credits
- International Chamber of Commerce (ICC Knowledge 2 Go) — UCP 600: Uniform Rules for Documentary Credits
