Honest buyer note: Our furniture is made from solid Indonesian teak in vetted workshops in Jepara and Bali, so expect natural grain, colour variation and a small dimensional tolerance between pieces. Grade A kiln-dried teak runs about 8–12% moisture content for export markets; teak grades (A, B, reclaimed) are banded descriptions, not guarantees of identical appearance. All prices, MOQs, lead times, CBM and container counts are indicative ranges (FOB Indonesia) and final pricing is by quote. We work only with legal, documented timber — Indonesia’s SVLK system, with V-Legal / FLEGT documents; FSC-certified teak is available on request at a premium. We do not claim certifications we do not hold. We act as an independent sourcing desk and handle export packing and documentation.
Teak furniture payment terms — the choice between a telegraphic transfer (TT) and a letter of credit (LC) — decide how the money flows between buyer and Indonesian supplier and how risk is shared on an export order. A TT is a direct bank-to-bank wire, usually structured as a deposit up front and the balance before or against shipping documents; it is fast, cheap and simple but rests on trust. An LC is a bank guarantee where the buyer’s bank promises to pay the supplier once specified shipping documents are presented; it protects both sides but costs more and involves more paperwork. Choosing the right structure protects your deposit and your cash flow. This guide explains both, the common splits, and when each makes sense.
Payment structure is one of the first things we agree with a new buyer, so here is the honest framework from an export desk.
How telegraphic transfer (TT) works
TT is the most common method in the Indonesian furniture trade because it is straightforward. The typical structure is a 30–50% deposit to confirm the order and start production, with the 50–70% balance paid before shipment or against a scan of the shipping documents. The deposit funds the wood and the workshop’s working capital; the balance is the buyer’s leverage to ensure the goods are right before final payment. TT is low-cost and quick, but it concentrates risk: the buyer trusts the supplier to deliver after the deposit, and the supplier trusts the buyer to pay the balance. That trust is exactly why supplier vetting matters — see how to vet a teak furniture supplier.
How a letter of credit (LC) works
An LC moves the trust to the banks. The buyer’s bank issues a credit promising to pay the supplier once the supplier presents the exact documents the LC specifies — bill of lading, invoice, packing list, certificates and so on. The supplier knows a bank stands behind payment; the buyer knows payment only releases when compliant shipping documents prove the goods were dispatched as agreed. The trade-off is cost and rigidity: LCs carry bank fees on both sides and are unforgiving about document discrepancies — a single mismatched detail can delay payment. LCs suit larger orders and new relationships where neither side yet has a track record. The documents an LC keys on are the same ones on our teak furniture export documentation page.
TT vs LC: which to choose
The decision is about order size and relationship maturity. For first-time or smaller orders, a TT with a sensible deposit is common, fast and keeps costs down. For large orders, or where buyer and supplier do not yet know each other, an LC’s bank guarantee can be worth its fees as insurance for both parties. Many established relationships settle into TT with a modest deposit once trust is proven, reserving LCs for big one-off programs. There is no single right answer — there is the right answer for your order value, your risk tolerance and how well you know the supplier.
Protecting your deposit
Whatever the method, protect the up-front money. Pay to the company’s verified bank account, not a personal account or a sudden last-minute change of bank details (a classic fraud pattern). Tie the deposit to a signed proforma invoice that states specifications, grade, moisture content, quantity, price, lead time and Incoterms. Keep the balance meaningful so you retain leverage until a pre-shipment inspection confirms the goods. And use an inspection before releasing the balance on a TT, so you are paying against verified quality, not hope. These safeguards turn a trust-based TT into a controlled transaction.
Incoterms and what the price includes
Payment terms ride alongside Incoterms, which define who pays for and controls each leg of shipping. Common terms are FOB (supplier delivers goods loaded at the Indonesian port; buyer arranges and pays ocean freight onward) and CIF (supplier arranges freight and insurance to the destination port). Knowing your Incoterm tells you exactly what your quoted price covers and where your cost and risk begin. Always confirm the Incoterm on the proforma so “price” is unambiguous. Quotes and Incoterms are explained on our teak furniture wholesale price page.
The proforma invoice is your contract
Whatever payment method you use, the proforma invoice does the real work of protecting you, so treat it as a contract rather than a formality. A good proforma states the exact specifications (grade, moisture content, dimensions, finish), quantities and unit prices, total value, the agreed Incoterm, the lead time tied to deposit, the payment schedule, the bank details, and the consequences if specifications are not met. Because the balance is paid against this document set, anything not written here is hard to enforce later. Spend the time to get it right and have both sides sign it. A supplier who engages seriously with a detailed proforma is showing professionalism; one who wants to keep terms vague is showing you something too. This document is also what an LC keys on, so precision here pays off twice.
Currency, fees and avoiding payment fraud
A few financial details save money and trouble. International trade is usually priced in US dollars, so agree the currency explicitly and be aware that bank wire fees and any currency conversion apply on both ends. On fraud: the dominant scam in this trade is the intercepted-email “change of bank details” message, where a criminal impersonates the supplier and asks you to wire the balance to a new account. Defend against it by verifying any bank-detail change through a separate channel — a phone or video call to a known contact — before sending money, and by only ever paying the verified company account on the signed proforma. These simple habits, combined with keeping the balance payable only after a passed inspection, turn payment into the controlled, low-risk step it should be.
Frequently asked questions
What deposit is normal for teak furniture orders? Commonly 30–50% to confirm the order and start production, with the balance before shipment or against documents. It varies by supplier and order size.
Is TT or LC safer? An LC protects both parties through a bank guarantee but costs more. A TT is cheaper and faster but relies on trust and good safeguards like inspection before balance.
How do I avoid losing my deposit? Pay a verified company account, sign a detailed proforma invoice, keep the balance meaningful, and inspect before final payment. Never wire to a personal account.
What is FOB versus CIF? FOB means the supplier delivers loaded at the Indonesian port and you arrange freight onward; CIF means the supplier arranges freight and insurance to your destination port.
Match the payment structure to the size of the order and how well you know the supplier, and protect the deposit with a detailed proforma and pre-shipment inspection. To agree terms on your order, contact our sourcing desk on WhatsApp at +6281139414563 or email bd@juaraholding.com, and review documents on our teak furniture export documentation page.