Meaning
Structured repayment plans allocate the total cost of injection mold tooling across a defined number of production parts. This schedule ensures that a fixed portion of the tooling cost is added to the price of each molded unit, allowing the customer to pay for the tool gradually as production parts are delivered. Once the target volume is reached, the tooling is fully paid off, and the per-part charge is removed.
Schedule Design
Financial contracts define the amortization surcharge, the baseline part cost, and the target volume of the production run. In constructing a unit amortization schedule, the accountant calculates the per-part fee by dividing the total tool cost by the agreed volume. For example, a forty thousand dollar mold amortized over eighty thousand parts results in a fifty-cent surcharge per part.
This surcharge is billed with each shipment, providing a steady and predictable method for the buyer to clear their tooling debt.
Program Risk
Volume shortfalls can occur if market demand for the molded part is lower than originally projected. If the program terminates before the target volume is reached, the remaining unpaid balance of the tooling cost becomes due immediately. Molders must maintain clear accounting records to track the cumulative payments received and prevent disputes over the remaining liability if production is cut short.
Account Reconciliation
Regular statements update both parties on the progress toward full amortization of the mold. When the final payment is recorded, the tooling ownership officially transfers to the buyer, and the per-unit surcharge ceases. This transparent accounting ensures that the cost baseline of the plastic part drops to its long-term manufacturing rate on schedule.
