Why your factory gets paid in 120 days
Factories can wait four months for payment. In contract manufacturing, that delay is treated as normal. But Net-120 is not a processing delay. It is five structural layers stacked on top of treasury policy.
The five layers
The spec leaves room. A camera-module ERS can run 40 pages. One unclear MTF threshold or environment qualifier can hold payment while engineers debate intent across time zones.
Test data doesn't flow automatically everywhere. Top-tier factories sync data in near real time. Many EVT and DVT suppliers still package QA exports manually, and OEM teams reformat them against their internal spec version.
The OEM re-verifies. Supplier quality programs are real, but a shipped lot is often re-tested on OEM equipment. A factory QA report rarely proves bench provenance, calibration state, and sample randomness with enough certainty.
Disputes resolve slowly. MSAs define process, but quality disputes still move through email, re-sampling, and sometimes a third-party lab. The invoice stays frozen.
AP is doing its own optimization. Net-45, Net-90, and Net-120 are treasury policy. OEMs with leverage improve days payable outstanding; the factory's cash becomes an interest-free loan.
The stack
Any single layer is manageable. The problem is they're sequential. You can't start the AP clock until the dispute resolves. The dispute can't resolve until re-verification. Re-verification can't start until data transfers. Five sequential delays on top of a deliberately long payment term: 60 to 120 days.
The trade
No technology fixes the power imbalance between a $50B OEM and a $50M factory. But there's a trade worth exploring: what if the OEM could eliminate re-verification costs, SQE travel, and dispute overhead in exchange for faster, verified-data-triggered settlement?
Verified, tamper-proof factory data with test bench provenance attached would let the OEM trust results without re-testing. The factory gets paid in 48 hours instead of 120 days. The OEM gets a cheaper quality process. Neither side is doing the other a favor.
That's what we're working on at Fairbuild. Whether the mechanism is a smart contract or something else matters less than the principle: verified completion should trigger automatic settlement.