Machinery contracts are where a first-time processor gives away the most, usually by accepting the first schedule they are shown.
Payment terms: the full observed range
Three payment structures appear in the sector’s own literature, all presented as things that actually happened:
| Structure | Context | Year |
|---|---|---|
| Full payment before delivery | Listed as a systemic challenge facing African importers of cashew equipment | 2019 |
| 40% down, balance on delivery | Completed equipment evaluation card, Vietnamese boiler supplier | 2011 |
| 70% down, balance on delivery | Completed supplier evaluation card | 2015 |
Show a buyer only the first line and you have told them to give up. Show all three and you have told them the truth, which is that this is negotiated. Two of the three observed structures leave money outstanding until delivery, and none of them is what a supplier opens with.
Note also how the first line is framed. ComCashew lists “suppliers demand full payment before delivery” as a challenge — something the sector’s own development programme considers a problem to be solved, not a norm to be accepted. Quote it back.
Structuring payment against milestones
No published payment schedule exists for this industry beyond those three data points. What follows is engineering judgement, offered because the alternative is accepting whatever you are handed.
| Tranche | Trigger | Indicative share |
|---|---|---|
| Advance | Contract signature, against an advance payment bank guarantee for the same amount | 20–30% |
| Manufacturing | Supplier’s notification of readiness, after pre-shipment inspection at the works against the specification | 30–40% |
| Shipment | Presentation of clean shipping documents | 20–30% |
| Retention | Successful acceptance test, on your nuts | 10–15% |
The retention is the whole point. It is the only remaining answer to the warning that once payment is made “it will be difficult to question the manufacturers’ claims of equipment performance.” Ten per cent held for sixty days past commissioning changes what happens when a machine underperforms — and it costs the supplier nothing if the machine works.
Where a supplier will not accept retention, the substitute is a performance bank guarantee for the same amount, valid until acceptance. Where neither is available, price the risk or walk.
Two further terms belong in the same conversation. Fix the currency and say explicitly who carries exchange movement between order and final payment — on a nine-month delivery cycle that is not a small exposure. And agree governing law and arbitration venue before signature rather than after a dispute.
Incoterms, and what FOB leaves you holding
Machinery from Asia is commonly quoted FOB a named port. Under Incoterms 2020, FOB means the seller’s job ends when the goods are on board the vessel. From that moment, ocean freight, marine insurance, discharge, import clearance, duty, demurrage, inland haulage, unloading and rigging are all yours.
| Term | Seller’s cost and risk end | What you are left arranging |
|---|---|---|
| EXW | At the supplier’s works | Export clearance in the supplier’s country, and everything after |
| FCA | On handing over to your carrier at a named place | Freight, insurance, import, inland |
| FOB | On board the vessel at the named port | Freight, insurance, import, inland |
| CFR / CIF | On board, but seller pays freight (and under CIF, minimum insurance) | Import clearance, duty, inland — and note risk still passes on board |
| DAP / DDP | At your named destination | Under DAP, import clearance and duty; under DDP, in principle nothing |
One technical point catches machinery buyers. FOB was written for cargo loaded over a ship’s rail, but most machinery moves in containers handed over at a terminal days before loading. For containerised shipments FCA matches what actually happens and moves risk transfer to a point you can witness.
If a supplier insists on FOB for a container, you carry risk through a period in which you have neither control of the goods nor anyone at the terminal.
Shipping, insurance and the inland leg
Cashew machinery is heavy, awkward and mostly steel. Ovens, rotary steamers and boilers are the items that break out of standard container dimensions onto flat racks or breakbulk — and they are the same items that create the inland problems: bridge limits, gate widths, turning circles and floor loading at the plant.
Walk the route before the shipment sails, not after it lands.
Insurance is a contract term, not an afterthought. Under FOB or FCA the cover is yours to arrange, and what you want runs warehouse to warehouse rather than port to port, because the uninsured gaps are at each end.
One trap worth naming: a stock throughput policy of the kind a processor buys for raw material and kernels does not cover project machinery in transit. That needs a marine cargo policy, and the erection phase needs cover of its own again.
What to settle before signature
- Payment tranches and their triggers, with retention or a performance guarantee
- The acceptance test — what is measured, on whose nuts, to what threshold
- Currency, and who carries movement between order and final payment
- Incoterm, chosen against how the goods actually move
- Transit insurance, warehouse to warehouse, and who places it
- Spares and consumables list, with prices held for a stated period
- Governing law and arbitration venue
- Documentation and training obligations, in writing
Every one of those is cheap to agree before signature and expensive to raise afterwards.