Payment Cycle

Order Payment Cycle refers to the period from the signing of a contract or receipt of goods/documents by the buyer and seller to the completion of full payment by the buyer. It covers specific time arrangements under different methods such as advance payment, payment against copy of bill of lading, letter of credit payment, and open account (O/A). It is commonly used in contract terms, proforma invoices, account reconciliation, and cash flow management. Notes: The payment cycle directly affects the seller's capital turnover and the buyer's financial pressure. It is necessary to clarify the starting date (e.g., bill of lading date, invoice date), payment method, whether holidays are included, overdue interest, etc. It differs from 'Payment Term', which focuses more on payment methods (e.g., T/T, L/C), while payment cycle emphasizes the length of time; it is similar to 'account period', but account period is mostly used in domestic trade. Reasonably setting the payment cycle helps balance risks for both parties, especially with new customers or large orders. It is recommended to combine credit insurance or advance payment ratio to control risks.