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Purchase Order on CNF term & L/C & 40% advance payment??? Please HELP

I received product order from overseas customer. What should be written on customer's purchase order based on CNF term and 40% advance payment with L/C? I asked customer to make 40% advance payment in order to start manufacturing the products and rest with L/C once we ship the goods to destination. I received Purchase order from customer which did not include shipping & handling cost but products cost & quantity. I already told the customer the cost for shipping & handling. Should they include shipping & handling cost on PO or not? What should be written PO & Invoice based on L/C?

Posted on 2013-02-15 00:59:57

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AskerRecommended Then it is not CNF, it should be FOB price.   As you know, the sea freight is different from week to week. when the production is ready, it is not the same as that you confirm the order.   I think it is better to do FOB, of course, if CNF, or CIF, then you may have covered this risk there.   And for the payment term in China, it is common to pay 30% deposit, and balance against copy of shipping documents.

2013-02-15 00:59:57

Hi Marie,  I understand what you expected. Firstly I would answer your question how to write you expected in the PO. You could write "40% of the contractual value as down payment shall be paid before production, the rest (60%) shall be paid by an irrevocable documentary L/C at sight to be open by the first class international bank". Your order is based on terms of CNF, of course the contractual value shall be included your product cost and freight expenses from your workshop to the specified destination in the contract but it shall be without any handling charges in the specified destination port. Secondly, if you could change a position to your client stand, could you accept such terms of payment? If yes, do you know why? If you could know the client acceptable reason in details, it could help you have more confidences to request your client to follow what you want. Even you could ask for 100% in advance before production. It is no problem. It is like as you said you have a royal Japanese client did 100% in advance. As a seller your payment terms are absolutely advantageous for your side, in other words, it is disadvantageous for the buyer. If your client to pay 40% in advance, how to guarantee their money safety? If I am a buyer I could ask you to issue us a Bank Guarantee with same amount (call it “Bank Bond for advance payment”). Of course, it will make the financial cost. From your statement, I understand you need 40% to buy the material or to build the necessary tooling and moulds. As a manufacturer I fully understand. But if I am buyer, I don’t understand it. I will say you that I have accepted 100% L/C to be open before production. If you want project money to finance this contract to move on, you could go to your bank to request them to give you a certain percentage loan after you mortgage the L/C that we open. Why you need us to give you a 40% in advance for more? Anyhow, the business is the one that both parties (Buyer and Seller) would agree and accept with win-win mutual benefits. For a long term of cooperation, if the seller could understand the buyer interests and the buyer know the seller concerns well, the relationship shall be sound to win in the market. Thanks

2013-02-15 00:59:57

If you are really the manufacturer, why should you ask 40% advance payment as T.T from your buyer who is in another country? It looks like you trying to get the upfront payment to pay the real manufacturer in your country is it? If you are a legitimate or bona fide exporter, you should ask your buyer to sen you a letter of credit not asking 40% upfront from a first  time buyer. What is the guarantee that you will ship the goods once you received the payment and disappear? Modified by Ramon MU on 21-03-2010 22:48

2013-02-15 00:59:57

At times, if the company is a Gold Member, I will pay the total amount at the time I place the order. However, this is only for samples and involves only a small amount of money. However, even that is a bad habit. I would never pay a large amount of money, or even a deposit, for a large order. For me, there is only one failsafe way to insure that I get the products, and the supplier gets his money, I use Alibaba Escrow. It protects both the seller and the buyer. And it is important that both the supplier and the buyer are protected at all times. Escrow is the best way to insure that this occurs. I see warning signs when someone ask me to pay a deposit via wire transfer or paypal. It is bad business to even ask a buyer to do this.

2013-02-15 00:59:57

l shall not say anything here ,haha ,the author may angry agin  by my words, Modified by Precious Wang on 13-04-2010 04:27

2013-02-15 00:59:57

I agree with ramon

2013-02-15 00:59:57