Payment terms are where trust and risk meet. The right method depends on the order size, the length of the relationship and how much documentation you are prepared to manage.
Telegraphic transfer
T/T is the most common method in China trade. A deposit before production and the balance before shipment is standard. It is simple and fast, but it offers limited protection if the supplier does not deliver as agreed.
Letter of credit
An L/C places the buyer’s bank between the parties and releases payment against compliant documents. It suits large orders and new suppliers, at the cost of bank fees and stricter paperwork.
Trade platforms and escrow
Platform payments hold funds until agreed milestones are met. They work well for smaller orders where both sides want a neutral record of the transaction.
Practical safeguards
- Pay the deposit to a company account whose name matches the contract
- Keep the proforma invoice, contract and payment receipt together
- Agree in writing what triggers the balance payment
- Ask for production and loading photos before releasing the final amount
Budget for bank charges
International transfers involve fees on both sides, and currency conversion adds a spread. For small orders, these charges can be a noticeable share of the total, so confirm who pays them before the invoice is issued.
