Payment is where trust is tested. The standard terms used in international trade exist for good reasons, and the biggest risk usually sits with the buyer rather than the supplier — particularly on a first order.
The standard terms
| Term | Typical for | Buyer exposure |
|---|---|---|
| 100% T/T in advance | Samples, small goods, first orders from new suppliers | High — funds gone before goods exist |
| 30% deposit, 70% against copy of B/L | Most common for repeat orders | Moderate — secure once the bill of lading is presented |
| 30% deposit, 70% before shipment | Common alternative | Higher than against B/L, since payment precedes dispatch |
| L/C at sight | Large orders, established relationships | Lowest, with bank protection, but requires bank fees and documentation discipline |
| O/A or open account | Only after a long track record | Lowest for buyer once trust exists |
The most widely used fair structure for a growing buyer is 30% deposit with 70% against a copy of the bill of lading. The bill of lading is the document of title. Paying against its copy means the supplier cannot ship the goods and receive payment without your involvement, while the supplier still has a meaningful portion of the value secured through the deposit.
Before your first transfer, run these checks
Verify the business exists. Check the company\’s registration number against the Chinese business registry. Confirm the registered name matches the name on the quotation and the bank account exactly.
Verify the bank account is in the company name. This is the single most important check. A payment to a personal account or to a differently named company provides no recourse. If a supplier asks for payment to a personal account for any reason, stop and ask why.
Watch for account name changes mid-transaction. A supplier sending a new bank account shortly before payment, especially with an unusual explanation, is a significant warning. Confirm any change by a second channel — a phone call to a known number, not one supplied in the change request.
Check payment currency against the contract. Paying in USD when the contract is in USD avoids unnecessary conversion exposure.
Confirm who is the contracting party. The name on the pro forma invoice, the business licence, the bank account and the bill of lading should all match. Where an export agent is involved, the arrangement must be documented and the responsibilities of each party written down.
The documentation chain that protects you
Keep these in order, because this chain is what resolves a dispute:
- Proforma invoice with full specification
- Purchase order confirming quantity, price, Incoterm, quality standard and inspection requirement
- Production confirmation and pre-shipment inspection report
- Commercial invoice and packing list
- Bill of lading showing shipper, consignee, quantity and declared value
- Payment record tied to the B/L copy
A missing document in that chain weakens your position later. Confirm before payment what documents you will receive and when.
Red flags
- Pressure to pay before agreeing specifications
- Bank account in a different company name
- Refusal to issue a proforma invoice or a formal quotation
- Deposit demanded at a higher percentage than the agreed terms, with a vague justification
- Communication only through email, with no verifiable company address or phone
- Any reluctance to allow inspection before the balance payment
- Contract terms stated verbally and not confirmed in writing
If you encounter two or more of these, stop the transaction. A legitimate supplier will not be damaged by reasonable due diligence, and a supplier who objects to it is telling you something.
Building toward better terms
Payment terms improve with track record, not with argument. After two or three smooth orders, ask for better terms and cite the history. Suppliers value predictability highly and will often agree to 20% deposit, or payment against B/L, once they know you will reorder.
The reverse is also true. Missed payments or unexplained changes destroy terms faster than anything else.
Ask us for our standard payment terms and we will put them in writing with your quotation. Request a quotation.