Thailand Manufacturing Payment Terms & Cash Flow 2026
Buying ready-made stock is a short cash cycle. Manufacturing is a long one — money leaves months before goods arrive, and the tooling payment is unsecured. Getting the terms right matters as much as the unit price.
Standard terms in Thailand, 2026
| Term | When it is used | Buyer risk |
|---|---|---|
| 30% deposit / 70% before shipment (T/T) | The default for new relationships | Deposit at risk |
| 50/50 on tooling | Tool cut on the first half, released on approval | Moderate |
| Letter of Credit at sight | Larger orders, first-time buyers on both sides | Low, higher bank cost |
| Documents against payment (D/P) | Established relationships | Moderate for the seller |
| Open account 30–60 days | After 3–5 clean orders and volume | Low for the buyer |
A factory quoting 100% payment in advance for a large custom order is either short of working capital or not treating you as a repeat customer. Either way it is a signal.
Structure the payments against milestones
Do not pay against dates. Pay against verifiable events:
- Deposit on signed PO and confirmed schedule.
- Tooling second instalment on approved first article, not on tool completion.
- Pre-shipment balance on passed final inspection report, not on packing completion.
- Retain 5–10% for 30 days after arrival on first orders where you can negotiate it.
Tying the balance to the inspection report is the single highest-leverage clause in the whole contract — see quality control and AQL.
The cash cycle compared
- Import ready stock: pay 30% now, 70% at shipment, receive goods 3–5 weeks later. Cash out roughly 6–10 weeks before revenue.
- Manufacture custom: tooling paid 4–6 months before revenue, deposit 3 months before, balance 4–8 weeks before goods land.
Model this before you compare unit prices — a 12% cheaper unit that ties up cash for four extra months is often the worse deal. See the full cost breakdown and lead times.
Currency and banking
Most Thai exporters quote USD; some prefer THB. Quoting in THB removes their FX buffer and can reduce the price, but moves currency risk to you. For programmes above a few hundred thousand dollars a year, discuss a forward contract with your bank rather than absorbing spot moves.
Confirm bank details by phone with a known contact before every transfer. Payment redirection fraud is common and the money is rarely recoverable.
Protecting the deposit and the tooling
- Name the tool in the PO with a tool number and state that it is buyer property.
- Require photographic evidence of the tool with the tool number stamped.
- Keep the tooling payment separate from the goods payment so the tool is not caught in a commercial dispute.
More on this in tooling and moulds: cost and ownership and the factory audit checklist.
FAQ
Is a 30% deposit normal in Thailand?
Yes. 30% on order and 70% against shipping documents or a passed inspection is the standard for export manufacturing, and it is negotiable downward once you have an order history.
Should I use a Letter of Credit?
An LC is worth the bank cost on large first orders or where the supplier will not accept inspection-linked payment. For repeat orders under six figures, an inspection-gated telegraphic transfer is usually simpler and cheaper.
Can I get credit terms from a Thai factory?
Open account terms of 30–60 days are achievable after several clean orders and meaningful volume, sometimes supported by trade credit insurance on the supplier's side.
What is the safest way to pay for tooling?
Split it: half on order, half on approved first article samples. Tie the second half to sample approval rather than tool completion, and document the tool as your property in the purchase order.