but if we get orders we will have inventory

[thedaffodils]

Hi,

Can you send 100 hubs and 100 rings and Lisa will pay $ 2000 as agreed today. As the cash flow improves we will pay everything but if we get orders we will have inventory.

The quote is an excerpt from an American, who've placed a PO to a plant in China. The total amount of the PO is around $6000 for 400 hubs and 400 rings . Now the goods is ready, but the American said they are stuck in fund now, and is unable to pay all for the good.

Now the American will pay $2000 for 100 hubs and 100 rings first.

I don't understand the words I highlighted in blue. Does he mean he will pay the balance $4000, once he gets orders from his customers? (If he cannot get the orders from his customers, the balance of payment to the Chinese plant will be postponed?) Or he means the 100 hubs and 100 rings we are going to mail for his inventory?

Thank you!

 

[MikeNewYork]

The original price for one set of hub and ring was $15 per set. The individuals do not have $6000 at this time. They are asking for a shipment of 100 sets at $20 per set so they can have revenue to purchase the remainder.

 

[thedaffodils]

hub=$ 12.51

ring=$3.07

The total OP is 6232 USD, for 400 hubs and rings.

The American customer told me they don't have enough money but would like to pay 2000 USD first. I am kinda worried if he means he will pay the balance of 4000 USD plus when his customers places the orders to him. In case his customers don't place the orders, they won't pay for the balance according to his words I highlighted in blue, that I am uncertain about.

Those parts are OEM, and no one will take it except him. They are mechanic parts, but not jewelry.

Today I asked an Australian about it, and he said it is ambiguous. Do you think so?

 

[MikeNewYork]

I think your understanding is correct. However, if you send him only 100 sets and he pays for them, there is technically no balance due.

 

[BobK]

I wouldn't say it's ambiguous; just intentionally non-committal. Like any business person, he needs cash flow. But he can't guarantee it; that is, if the worst came to the worst he'd go bust. (Your boss would probably be better off without customers like him ;-))

b

 

[SoothingDave]

It is confusing. I had to read it a couple times.

He is saying that if you send him 100, then if he receives any orders from his customers, that he will have parts in stock (inventory) so that he can satisfy his customers.

 

[thedaffodils]

I think your understanding is correct. However, if you send him only 100 sets and he pays for them, there is technically no balance due.

The problem is those parts are made for him according to the drawings he provided as he has placed the PO to the plant. If he does't take those, the parts would become scraps as no one will buy them.

 

[thedaffodils]

I wouldn't say it's ambiguous; just intentionally non-committal. Like any business person, he needs cash flow. But he can't guarantee it; that is, if the worst came to the worst he'd go bust. (Your boss would probably be better off without customers like him ;-))

b

Right, I was thinking about it for many years.

 

[thedaffodils]

It is confusing. I had to read it a couple times.

He is saying that if you send him 100, then if he receives any orders from his customers, that he will have parts in stock (inventory) so that he can satisfy his customers.

Well, I have replied to his email and asked him to clarify, as I could not access to this website this afternoon from China, and read the responses of you guys.

 

[MikeNewYork]

I don't what your contract says. That could be your problem or his problem. I would not recommend making unique parts for someone without a contract.

 

[thedaffodils]

I don't what your contract says. That could be your problem or his problem. I would not recommend making unique parts for someone without a contract.

The PO could be considered as contract as the unit price, lead time, etc are well stated. Generally the plant should have requested the deposit, but it didn't.

It is useless to sign a contract with overseas buyers as the plant cannot go to the US and file a lawsuit against him. He has been working with the plant for years.


Thank you very much, everyone again. I think I am clear about his words now.


I'll handle the relevant commercial issue on my own.

 

[MikeNewYork]

OK. Good luck.