China Sourcing Payment Terms: T/T, LC, Escrow
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This tag covers how money actually moves when you buy from China — Telegraphic Transfer (T/T), Letters of Credit (LC), and escrow, and which one protects you in each scenario. A typical first-order structure is 30% deposit by T/T and 70% balance against a passed pre-shipment inspection or copy of the bill of lading. LCs add bank-backed security for larger orders but carry issuance fees and rigid document requirements that catch out first-time buyers.
When you set payment terms, the pitfall is paying 100% up front or releasing the balance before inspection — that removes all bargaining power if quality is wrong. We structure terms so the final payment is tied to a passed QC inspection, keeping the supplier accountable until goods are verified.
Guides (1)
FAQ
What's a safe payment split for a first China order?
A common structure is 30% deposit by T/T and 70% balance after a passed pre-shipment inspection or against the bill of lading. Avoid 100% up front, especially with a new supplier.
When is a Letter of Credit worth using?
LCs make sense for large orders or unfamiliar suppliers because a bank guarantees payment only when documents match exactly. They cost more and demand precise paperwork, so they're overkill for small recurring orders.
Does escrow protect me on Alibaba Trade Assurance?
Trade Assurance holds funds and offers some dispute coverage, but limits and conditions apply, and it doesn't replace independent quality inspection. Treat it as one layer, not a substitute for QC before release.
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