That's an excellent and very practical question. For a city government procuring hundreds of urban trash bins, the payment terms are typically structured to ensure accountability, transparency, and alignment with public budgeting cycles. The process is more formalized than a standard commercial purchase.
Generally, you can expect a breakdown like this:
1. Procurement & Contract: The process starts with a formal Request for Proposal (RFP) or bid solicitation. The awarded vendor signs a detailed contract with the city. This contract is the governing document for all terms, including payment.
2. Common Payment Structures:
* Net 30/45/60 upon Delivery and Acceptance: This is very common. The city pays the invoice a specified number of days (30, 45, or 60) after the bins are delivered, inspected, and formally accepted by the public works department. Acceptance is key—it's not just upon arrival.
* Progress Payments: For very large, custom, or phased orders, the contract may include milestones. For example, a percentage (e.g., 30%) might be due upon contract signing to initiate manufacturing, another percentage upon shipment, and the balance upon final acceptance.
* Retainage: It's not uncommon for public works contracts to hold back a small percentage (e.g., 5-10%) of each payment as "retainage." This amount is paid after a warranty period (e.g., 90 days) to ensure the products meet all specifications and performance standards.
3. Key Influencing Factors:
* Municipal Budget Laws: Payments are often tied to the city's fiscal year. A purchase approved in one fiscal year must often be invoiced and paid from that year's allocated funds.
* Grant Funding: If the purchase is funded by a state or federal grant, the payment terms must comply with the grantor's specific reimbursement rules, which can add steps and time.
* Purchase Order (PO) Requirement: Almost all transactions require an official PO number to be referenced on every invoice. No PO, no payment.
In summary, don't expect payment upfront or immediately upon shipment. The standard is payment after official acceptance, following a formal invoice, and within a net term that accounts for internal processing. The total timeline from delivery to payment can easily be 45-75 days. Vendors bidding on municipal contracts must factor this cash flow cycle into their pricing and operations. Clear communication with the city's purchasing department and project manager is essential to understand the specific timeline for that municipality.