The container has arrived and your customer has stopped answering.
The factory has been paid in full. Duty, clearance and inland delivery are paid. The windows are cut to their openings and coated in their colour, so nobody else can use them. You took a 30% deposit, because that is what everyone takes.
At this point 73% of your invoice is gone and cannot come back. You have collected 30.
The forty-three points between those two numbers are not an argument. They are a calculation you can run before the profiles are cut. The last item on the checklist at the end costs nothing, and it is the one that decides whether this happens to you.
Everyone quotes thirty per cent. That number was calculated for a product that can be sold to somebody else. A custom window cannot. When one is abandoned, the loss is not the margin — it is the cost.
Everything reduces to three numbers
Committed — paid, or obliged to pay. Unrecoverable — the part that cannot come back through returns, rework or resale. Received — cleared in your account.
Exposure = unrecoverable − received
Positive means you are financing your customer's order. That is the whole model. And committed is not unrecoverable: uncut profile goes back to the extruder, cut and coated profile does not.
The point of no return is an operation
For aluminium windows it is cutting and coating. Before it, profile is stock. After it, the length and the colour are fixed, and neither can be undone at a cost that makes sense.
Find that operation on your own order and put a payment milestone immediately before it. If the milestone is missed, nothing is cut.
What "already spent" means for an importer
Your exposure is landed cost, not the factory invoice: goods, freight, insurance, duty and clearance, inland. Size the deposit on the factory price and you under-collect by the whole logistics chain.
You are also the importer of record. If nobody collects the container, the duty and storage follow the bill of lading — and the bill of lading is yours.
What the order costs you, stage by stage
Percentages of the invoice you charge your customer. Landed cost 82%, an 18% margin: goods 65%, freight and insurance 8%, duty and clearance 6%, inland 3%.
| Stage | Committed | Unrecoverable |
|---|---|---|
| Drawings, samples, tooling | 2% | 2% |
| Factory deposit paid | 21.5% | 12% |
| Profiles cut and coated | 42% | 34% |
| Glazed, assembled, crated | 55% | 46% |
| Factory balance paid, shipped | 73% | 64% |
| Arrived, duty and inland paid | 82% | 73% |
At the point of no return you have 34% of your invoice in material that cannot be resold, against a factory deposit of 21.5%. That twelve-point gap is money you have not collected from anybody.
| Salvage on abandoned goods | Deposit needed |
|---|---|
| 25% of landed cost, reworked into another project | about 62% |
| 10% of landed cost, sold as material or scrapped | about 74% |
Sixty to seventy-five per cent of invoice value — not thirty.
The range is honest: with a rework channel you can collect less, and without one you cannot.
The margin moves the number, not the direction
The 18% above is an assumption, not a market rate.
| Gross margin | Landed cost | Deposit needed (salvage 10% / 25%) |
|---|---|---|
| 15% | 85% | 77% / 64% |
| 18% | 82% | 74% / 62% |
| 22% | 78% | 70% / 59% |
| 26% | 74% | 67% / 56% |
| 30% | 70% | 63% / 53% |
As margin improves from 15% to 30% the deposit falls from 77% to 53%. That spread is why this is a reference, not a recommendation: the row you belong in is a fact about your own P&L.
It never approaches 30%. The rule is not short at thin margins and adequate at fat ones — it is short across the range, because the product it was calibrated for is not the product being sold.
Staged, not lumped
| Milestone | Collected | Unrecoverable at that point |
|---|---|---|
| Order placed | 30% | 12% |
| Before material release | 60% | 34% |
| Before shipment | 90% | 64% |
| On arrival | 100% | 73% |
At every line, collected is ahead of unrecoverable. The schedule is not a payment plan, it is a hedge: each instalment buys the right to take the next irreversible step.
Compare it with 30% on order and 70% on delivery. At the cutting stage the customer has paid 30% against 34% of unrecoverable material, and from that moment every additional dollar is unsecured. If the order collapses on the quay the shortfall is about 43% of the invoice.
This is not hypothetical. A 30% deposit, goods customised to an end buyer, a port closure and a resale at half contract value left one importer 50% down after freight and port charges. The deposit was exactly the size the rule of thumb recommends.
What you are allowed to ask for
What you may collect depends on the law where your customer is. Residential building work is commonly capped — several Australian states and a number of US states limit deposits as a percentage of contract value — while commercial supply contracts usually are not.
Whether your contract is classified as supply or as building work decides the regime, so that drafting is a commercial decision, not a clerical one. Where a cap sits below your exposure you cannot invent the difference; it has to come out of the upstream terms.
In common-law jurisdictions a deposit is not forfeitable because it is labelled non-refundable. Forfeiture must be a genuine pre-estimate of loss or it is a penalty. Which is the quiet argument for a schedule: 30% on order and 30% on material release is not a 60% penalty, it is payment for work performed.
On the factory's side the constraint runs the other way. Under China's Civil Code a deposit is capped at 20% of contract value, and anything above carries no deposit protection. Pay a factory 40% up front and only 20% is exposed to the double-return rule; the rest is an unsecured advance you recover by proving loss.
Upstream: what to hold back
- Pay the balance against inspection, not a date. The cheap moment to find a defect is before the container is sealed.
- Hold 5–10% retention past arrival. A 10% retention cuts the deposit you need by roughly seven points.
- Gate the material release in writing. A factory that cuts on a verbal go-ahead has moved your point of no return without telling you.
- Split the order, and own the tooling. Three shipments cap the loss on any one at a third. The tooling is often the only asset that survives.
- Verify any change of bank details independently. Invoice fraud targets exactly this transaction.
A letter of credit protects you from the factory. It does nothing about your customer walking away. Two risks, two tools — buyers routinely buy the first and assume they have bought the second.
In transit, the document is the leverage
Who books the freight holds the document. Book it and you choose the forwarder and hold the bill of lading. Let the factory book and the document is theirs.
Demurrage is a clock. Storage and detention accrue daily and step up. Decide within about 48 hours of a missed collection — after that the charges exceed the value and abandoning becomes the rational choice.
Some jurisdictions will not let you move the goods. Turkey, India and Brazil require the original buyer's written consent for resale or return, and after a fixed period — 45 days in Turkey — uncollected goods are seized and auctioned with the original buyer holding priority. The defence is a contract clause requiring that consent within a stated number of days. And once entered, the duty is yours.
Four ways out, ranked by what they return
Rework into another project — strongest and rarest, and it requires knowing which of your live projects could absorb a near-miss in size or colour. Resell at 20–40% of landed cost, after discount, re-cutting, storage and delay come off. Return to origin, rarely economic. Or abandon, correct when storage exceeds value, and worth taking early enough to be a saving.
Before the next custom order
- Name the operation after which the goods cannot be resold, and write it into the contract.
- Build the committed and unrecoverable columns for this order.
- Price the deposit off landed cost, not ex-works value.
- Set milestones before each irreversible step, not on dates.
- Check the deposit cap where your customer is, and the classification of your contract.
- Ask who will accept the goods if your customer's own buyer does not — before the profiles are cut.
The last one is uncomfortable, which is why it is last. It is also the only one that costs nothing.
The deposit is the price of the right to cut aluminium
Custom work is where the margin is, precisely because it is where the risk is. Worth pricing the risk instead of inheriting it.
The rule of thumb is not a number someone chose; it is the residue of a thousand orders that could have been resold. On an order that cannot be, it is simply the wrong number — and the gap is what you lose the first time a customer changes their mind after the coating line.
If you are importing custom windows and want this model run against a live order before the profiles are cut, that is the part of the work we do before production starts. For how the factory cost itself breaks down: the bill-of-materials method.