Payment Terms When Buying from China - T/T, LC, and What to Watch For

Payment terms are where many first-time importers feel uneasy. Chinese suppliers commonly use different methods than local vendors. Knowing the options protects your cash flow and reduces fraud risk.

Telegraphic transfer (T/T)

T/T is the most common method for China trade. Typical structure:

• 30% deposit before production
• 70% balance before shipment or against copy of bill of lading

T/T is fast and widely accepted. The risk is paying before you receive goods. Mitigate this by working with verified suppliers and using inspection or escrow where possible.

Letter of credit (LC)

An LC is a bank guarantee: the bank pays the supplier when they present correct documents (invoice, bill of lading, packing list). LCs add cost and paperwork but suit high-value orders or new supplier relationships.

Most small and mid-size Sri Lankan importers use T/T; LCs are more common above USD 50,000 or for regulated goods.

PayPal and trade assurance

Some suppliers accept PayPal or Alibaba Trade Assurance for smaller orders. These offer buyer protection but often at higher fees and limited order sizes.

Red flags to avoid

• Suppliers insisting on 100% upfront to a personal account
• Prices far below market with pressure to pay quickly
• Refusal to provide company registration or factory details
• Changing bank account details after you have started the order

Currency and timing

Most China trade is quoted in USD. Plan for:

• Bank wire fees (both sides)
• Exchange rate at transfer date
• Lead time between deposit and balance payment

How an import partner helps

Sinofetch verifies suppliers, structures payment milestones, and coordinates documentation so you pay at the right stage, after specs are confirmed and before goods leave the factory.