Who moves first: the oldest question in trade, and a practical answer
The buyer does not want to pay before delivery. The seller does not want to ship on a promise. Escrow does not ask either of them to trust more; it removes the moment of exposure.
A deadlock that goodwill does not solve
Every first transaction between two companies contains the same problem. Somebody has to go first, and whoever does carries the entire risk of the other side failing to perform. Between long-standing partners this is settled by history. Between strangers it is settled by negotiation, and often by one side accepting terms it does not like in order to win the order.
Across borders the problem is worse, and not because of any assumption about honesty. It is that the remedy is impractical. Enforcing a contract in another jurisdiction is slow and expensive, and for a deal worth tens of thousands of euro the cost of pursuing it frequently exceeds the amount in dispute. The right to be made whole exists on paper and is not worth exercising.
This is why deals stall at exactly the point where both sides agree on price. The commercial terms are settled; the sequence is not.
A neutral account, and conditions written down
Escrow replaces the question of who goes first with a structure. The money leaves the buyer and goes into a neutral account that neither party controls alone. The seller ships, knowing the funds exist. The conditions are checked, and only then is the money released.
Escrow at Reibanq follows four steps. Both sides agree and write down the conditions that must be met before the money moves. The buyer deposits the funds into the escrow account, separate from both parties. The seller delivers the goods or the service, and the evidence travels with the delivery. When the conditions are met, the funds are released.
The critical work happens in the first step, and it is not financial. Conditions that read well in an email are frequently unusable as release criteria: "satisfactory quality" is a dispute waiting for a venue. "Signed delivery note from the named freight forwarder at the port of discharge" is a fact that can be checked by someone who was not present.
Three deals that stall without it
Nobody has a reason to go first. A new counterparty with no trade history, and two sides each waiting for the other to move. Escrow converts an argument about trust into an administrative step.
The order is too large to guess on. Risk appetite is a function of size. The same counterparty may be perfectly acceptable for a first order of EUR 5,000 and unacceptable for one of EUR 150,000, and it is reasonable to treat the two differently.
Two legal systems, one set of terms. Where enforcement across borders is slow, tying the money to the terms is more effective than relying on the right to sue.
There is also a case for escrow inside staged work: production paid partly upfront, asset transfers, and services delivered in phases, where each release is tied to a milestone rather than to the end of the project.
When escrow is the wrong tool
Escrow is not for every deal, and proposing it in the wrong situation carries a cost of its own. On small, frequent, repeat orders with an established partner, the administrative weight is out of proportion to the risk, and raising it can read as a statement about the relationship rather than about the transaction.
It also does not help where the disagreement will be about quality rather than delivery. If the conditions cannot be written as facts that a third party can verify, escrow moves the argument to a later date rather than preventing it. In those cases the useful work is in the specification, not in the payment structure.
Finally, escrow ties up working capital between deposit and release. For a buyer operating on thin cash headroom, that period is a real constraint and belongs in the calculation.
Questions both sides should settle in writing
- Who holds the funds, and are they held separately from the provider's own money?
- What exactly triggers release, and who confirms that it happened?
- What happens if the delivery is late, partial, or disputed?
- Who pays the cost of the escrow, and is it split or borne by one side?
- How long can the funds remain held before the arrangement lapses?
At Reibanq, escrow is part of the same business account rather than a separate product to buy, accounts run on payment services supplied and managed by Orenda FS B.V., and client funds are held separately from Reibanq's own money.
What both sides usually ask
Who holds the money while the deal is open?
The funds sit in a neutral escrow account that neither party controls alone. Reibanq accounts run on payment services supplied and managed by Orenda FS B.V., and client funds are held separately from Reibanq's own money.
What happens if the seller does not deliver?
The release conditions are not met, so the money is not released. That is the whole mechanism: the buyer's exposure is limited to the period the funds are held, rather than to the difficulty of recovering a payment already made.
Who decides that the conditions have been satisfied?
Whoever the parties named when they wrote the conditions down. This is why conditions have to be facts a third party can check, such as a signed delivery document, rather than judgements such as satisfactory quality.
Is escrow worth it on a small order?
Often not. On small, frequent orders with a known partner the administrative weight outweighs the risk. Escrow earns its place on first transactions, on large single orders, and on staged work where each release is tied to a milestone.
Hold the payment until the terms are met
Funds in a neutral account, released only when the conditions you wrote down have been satisfied.