For non-standard assembly line projects, payments are linked to milestones, and milestones require evidence (Source: Industry practice). Mainstream models: 3-2-3-1-5 or 3-3-3-1 (Source: Industry insights). Core concept: Each payment is tied to a quantifiable milestone (Source: Toutiao)—Key principles: Clearly define percentages and timelines; acceptance is deemed effective by default (Source: Industry insights).
I.
The 3-2-3-1-5 Model
Contract signing: 30% (Source: Toutiao); Joint review of 3D drawings: 20% (Source: Toutiao); In-factory pre-acceptance: 30% (Source: Toutiao); On-site final acceptance: 15% (Source: Toutiao); Warranty expiration: 5% (Source: Toutiao)—3-2-3-1-5: Drawings / Pre-acceptance / Final acceptance (three evidentiary milestones).
II.
The 3-3-3-1 Model
Advance payment: 30% (Source: Industry insights); Delivery: 30% (Source: Industry insights); Installation & acceptance: 30% (Source: Industry insights); Warranty retention payment: 10% (Source: Industry insights); Locked milestones: Sheet metal parts received / Assembly completed / Full machine commissioning (Source: Industry insights)—3-3-3-1: Payments follow milestones (supplier proactively controls the pace).
III. 30/40/20/10
Within 3 days of signing: 30% advance payment; Before delivery: 40%; 10 days after acceptance: 20%; Warranty retention: 10% (refunded without interest after 1 year); Invoice: VAT special invoice — 30/40/20/10: The bulk of the payment is made upon completion of production but before delivery (minimizing financial pressure on the supplier).
IV.
Industry Variations
30/60/7/3: 30% deposit + 60% upon pickup + 3% warranty (2-year term); Yingyee: 20–40% order + 10–20% engineering approval + 20–30% pre-FAT + 10–20% post-FAT + 5–10% on-site; hubenauto: 20% order + 30% design approval + 30% production completion + 20% delivery/acceptance; Anqing: 20% advance + 70% final acceptance + 10% warranty (1-year term); Large-scale projects: 10% contract + 20% engineering approval + 30% production + 25% arrival + 15% acceptance — Variations: Selected based on project complexity (3 installments for simple projects; 5 installments for complex ones).
V. Key Terms
Fixed Timelines: Within 3 days of contract signing, prior to shipment, and within 7 working days of acceptance (Source: Industry insights); Default Acceptance: Prevents endless fault-finding to withhold payment (Source: Industry insights); Milestone Evidence: FAT report + video verification (Source: hubenauto); Invoice First: Compliant invoice provided prior to payment;
Interest: Interest on overdue payments—Terms: Timeframe + rate + evidence (all explicitly defined).
VI. Risk Mitigation
Down Payment: Not to exceed 30–50% (Source: sendottech); Long-lead Materials: Payment based on procurement receipts (Source: Sinospect); Warranty Retention: Retain 3–10% (Source: Yuanchuangli); Milestone Deductions: Independent accountability for each milestone (Source: Industry insights);
Final Payment: Settled upon SAT—Safeguards: Cap on deposit + sufficient warranty retention (holding the funds ensures leverage).
VII. Procurement Recommendations
First, select a payment model (e.g., 3-2-3-1-5 or 3-3-3-1); second, link to evidence (drawings/FAT/video); third, explicitly define terms (timelines and ratios); fourth, retain warranty funds (5–10%);
fifth, enforce accountability by milestone—Strategy: Model + Evidence + Terms (locked in across all three dimensions).
