Two importers buy the same goods from the same factory at the same price. One pays "TT 100% before shipment"; the other "30% deposit, 70% against B/L copy". Same invoice, radically different risk: the first has all their cash exposed before goods exist in transit; the second holds most of their money until independent evidence says conforming cargo is on the water.
Payment terms are the cheapest risk instrument in trade — they cost nothing but negotiation. This guide decodes the standard structures, the trigger points that matter, and the negotiating logic on both sides of the table.
Decoding the vocabulary
TT means telegraphic transfer — trade slang for a bank wire (the term survives from telegraph days). "TT 30/70" is shorthand for the split: 30% deposit at order confirmation, 70% balance at a defined later trigger. Other vocabulary you will meet: proforma invoice (the pre-order quote you pay the deposit against), commercial invoice (the final document), B/L copy vs original (evidence of shipment vs the title document itself), and LC / DP / DA (bank-intermediated alternatives covered in trade finance).
The percentages matter less than the triggers. "70% before shipment" leaves you fully exposed before the vessel sails; "70% against B/L copy" means you pay when independent evidence shows loaded cargo; "70% after arrival/inspection" shifts further in your favour and is correspondingly rarer. Every negotiation is really about these triggers.
The standard structures and what they signal
Terms follow trust, capacity and market power on both sides.
- 100% prepayment. All risk on the buyer. Justifiable for tiny sample orders; a red flag as a demand on real tickets from an unproven counterparty — this is exactly the pattern escrow exists to replace.
- 30/70 against B/L copy. The workhorse of China trade. The deposit funds materials and signals commitment; the balance releases on shipment evidence. Balanced enough that both serious factories and serious buyers accept it readily.
- 50/50. Common for custom or low-volume production where the factory’s material outlay is proportionally heavy. Same trigger logic applies to the second half.
- 20/80 or lighter deposits. What history earns: established relationships shift the split toward the buyer as counterparty risk falls.
- Open account (Net 30/60/90). Ship first, pay later — the supplier finances you. Standard between long-term partners at scale, often backed by trade-credit insurance on the seller’s side. The endpoint of the trust ladder, not the entrance.
Negotiating terms like an operator
Understand the seller’s constraint: deposits are not greed — they cover materials and protect the factory against order abandonment, a real cost in custom production. What you are negotiating is not "less deposit" in the abstract but risk-for-evidence swaps: a smaller deposit in exchange for escrowed balance (their assurance of committed funds), balance against B/L copy instead of before shipment (your assurance of real cargo), or third-party inspection as the release gate (both sides’ assurance of conformity).
Verification changes the conversation: a supplier who has passed registry and account verification, and a buyer paying through a platform with documented settlement, both bring evidence that substitutes for blind trust — and evidence is what earns better terms in both directions. So does payment history: reliable buyers get lighter deposits within a few cycles; ask for the improvement explicitly at reorder time, because factories rarely volunteer it.
The cash-flow and FX mechanics of staged terms
Staged terms create two dated foreign-currency obligations — which is exactly what your treasury should manage. Lock the rate for both stages at commitment (staged locks or a forward for the balance), so the January price survives April settlement. Map both payments into the cash calendar with their funding lead-times, so balance day is an execution, not a scramble. And if you hold hard-currency balances, staging lets you fund each leg from planned conversions rather than payment-morning spot deals.
One more operator habit: align the release document in your payment terms with your Incoterm (FOB produces an on-board B/L; FCA a carrier receipt), so the evidence your money waits for is evidence your logistics actually generate. Terms, Incoterms and FX policy are one system — the businesses that treat them that way keep both their margins and their goods.
Key terms
TT
Telegraphic transfer — trade shorthand for a bank wire payment.
Proforma invoice
The pre-order document quoting goods, price and terms — what the deposit is paid against.
B/L copy vs original
Shipment evidence vs the negotiable title document — different security levels as payment triggers.
Open account
Shipping before payment on agreed credit terms — the supplier finances the buyer.
Trade-credit insurance
Cover on the seller’s receivable that makes open-account terms offerable at scale.
Release trigger
The evidenced event (document, inspection) on which a staged payment becomes due.
Frequently asked questions
What does "TT 30/70 against B/L copy" mean exactly?
You wire a 30% deposit at order confirmation; the factory produces and ships; when they present the bill of lading copy showing loaded cargo, you wire the remaining 70%. Your maximum pre-evidence exposure is the deposit.
Is a 30% deposit standard?
For China-corridor manufacturing, 30/70 is the common baseline, flexing with customisation (higher for bespoke goods), order size and history (lower as trust builds). Deposits above 50% on standard goods from an unproven supplier deserve a counter-offer or escrow.
How do I safely pay the balance "against documents"?
Define the document set precisely in the proforma (B/L number format, named inspector’s certificate), verify the documents when presented (B/L numbers are checkable with carriers), and pay to the verified account only. For larger tickets, run the release through escrow so the condition is enforced neutrally.
When should I accept open account from my own buyers?
Mirror logic: after payment history, with credit checks, capped exposure per buyer, and ideally trade-credit insurance. Extending open account is lending — price it and control it as lending.
Can better payment rails earn better terms?
Often, yes. Suppliers value certainty and speed: committed receive amounts, fast documented settlement and verifiable confirmations reduce their risk, which is negotiable currency — lighter deposits, better prices, or priority production slots.
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