China Supplier Payment Terms: T/T, L/C, and OA Explained for Importers

You found the factory. The quote is fair. You are ready to wire the deposit. Then the supplier sends payment terms that stop you cold: "30% T/T deposit, 70% against copy of B/L," or "100% T/T in advance," or "we prefer L/C at sight." If none of that is clear, you are not alone — and the way you pay is one of the few decisions in importing that can cost you the entire order if you get it wrong.

China supplier payment terms are not a formality. They are a risk allocation. Every method trades a different slice of safety between you and the factory, and the "normal" option for one buyer is a trap for another. I am Karsa, founder of Youna Global, a Guangdong-based sourcing team. We arrange payments on real purchase orders every week, and the mistakes we see are almost always the same three: paying 100% up front to a stranger, assuming L/C makes you bulletproof, or trusting OA terms that were never real.

This article breaks down the three methods — T/T, L/C, and OA — in plain language, with the pros, cons, real costs, and the exact red flags we watch for. By the end you will know which terms to accept, which to refuse, and how to structure payment so a factory has to earn your money instead of grabbing it.

01 Why Payment Terms Are a Risk Decision, Not a Formality

Paying a Chinese supplier is not like paying a domestic vendor on Net-30. The distance, the language gap, and the reality that your money crosses a border before your goods do mean the payment method itself is your first line of defense — or your first exposure.

The core tension: a factory wants cash early and certainty late; a buyer wants the opposite. The terms you negotiate decide who carries the risk if something goes wrong — a no-show shipment, a quality disaster, a factory that vanishes after the deposit.

Two principles we repeat to every new client:

• Never pay 100% before you can verify the goods exist and match the spec. Verification can be a video call, a pre-shipment inspection report, or a copy of the bill of lading — but it must be something real, not a promise.
• The safer the method for you, the more it costs or the more paperwork it needs. There is no free safety. T/T is cheap but trusts the factory; L/C is safer but pays the bank; OA is easiest on your cash flow but is earned trust, not a starting offer.

The rest of this article is the mechanics behind those two rules.

02 T/T (Telegraphic Transfer): The Default, and Its Variants

T/T — short for Telegraphic Transfer, essentially a bank wire — is the method used in the vast majority of China trades. It is fast, cheap, and universally accepted. The variation is when each portion is paid.

30/70 T/T (the standard)

The most common structure: 30% deposit to start production, 70% paid before the goods ship (sometimes "against copy of B/L," meaning after the bill of lading is issued).

• Pros: Simple, cheap (just wire fees), fast to set up, accepted by every factory.
• Cons: You still pay 70% before the goods leave China. If the factory ships junk, your leverage is mostly gone by then.
• Our rule: Never release the 70% on a promise. Release it only after a pre-shipment inspection (or your own verification) confirms the order is correct and packed. Tie the balance to proof, not to a calendar date.

100% T/T in advance

Some factories — especially for small, custom, or first-time orders — ask for everything up front.

• Pros: Suppliers love it; you may get a tiny price edge.
• Cons: You carry 100% of the risk. If the factory is a scam or simply fails, you have almost no recovery once the wire clears.
• Verdict: Only acceptable with a long-trusted, verified supplier — never with someone you just met on a marketplace. Most payment scams begin with "just pay 100% in advance."

100% T/T after shipment (rare, buyer-favorable)

The reverse: you pay only once the goods are on the water and documents are in your hands.

• Pros: Maximum safety for you.
• Cons: Almost no factory agrees unless you are a large, repeat, low-risk buyer. If a stranger offers this unprompted, be suspicious — it is usually a sign of either desperation or a setup.

T/T costs

The transfer itself is cheap — a wire runs roughly $15–$45, and the real leak is the FX spread (the gap between the mid-market rate and what your bank gives you), which quietly takes another 0.5% to 3% on every payment. On a $20,000 order that is $100–$600 you never see leave. Use a multi-currency account or a forwarder payment channel to shrink it. This same invisible cost shows up in our hidden costs of importing from China breakdown — payment terms decide your cash-flow cost, not just the invoice.

03 L/C (Letter of Credit): Bank-Backed, But Not Bulletproof

A Letter of Credit is a promise from your bank to pay the supplier, but only after the supplier presents documents that exactly match the credit's terms — typically a clean bill of lading, commercial invoice, and packing list. The most common form for importers is L/C at sight: the bank pays as soon as the documents are correct.

How it works

1. You open the L/C with your bank, specifying exact documents and conditions.
2. The factory ships and presents the documents to its bank.
3. The banks check the documents line by line. If they match, the supplier gets paid. If they don't, payment is withheld until corrected.

The rules governing most L/Cs are the ICC's UCP 600 (Uniform Customs and Practice for Documentary Credits) — the global standard your bank will reference. See the International Chamber of Commerce for the framework behind documentary credits.

• Pros: Strong protection. The supplier is paid only against documents proving shipment, so a factory cannot simply take your deposit and disappear. Good for large first orders with an unproven but legitimate factory.
• Cons: Cost and complexity. Expect bank fees of roughly 1% to 3% of the L/C value (industry guides place the range near 0.5%–2% of value plus about $150–$500 in opening/advising charges), split between opening and advising charges. The tiniest document discrepancy — a misspelled name, a missing signature — can stall payment and cost days or amendment fees.
• Verdict: Use L/C for high-value orders with a new-but-vetted supplier where the deposit risk is too large to carry on T/T alone. For a $3,000 order, the fees are not worth it; for a $300,000 order, they are cheap insurance.

Key Takeaway

L/C does not guarantee product quality — it guarantees documents, not goods. A factory can ship conforming paperwork around a container of defects. You still need inspection. L/C protects you from non-shipment and document fraud; it does not replace QC.

04 OA (Open Account): 30/60/90 Days, and Why Strangers Don't Get It

OA means you receive the goods and pay later — typically OA 30, OA 60, or OA 90 days after shipment. From a cash-flow view it is the best deal imaginable: you sell the product before you pay for it.

• Pros: Frees your working capital completely. You import, stock, and often sell before a cent leaves your account.
• Cons: It is 100% trust extended by the supplier. If you default, they have little recourse across a border. That is precisely why factories reserve OA for buyers they know, with a track record of clean, paid-on-time orders.

The trap: If a factory you just met offers OA 90 days up front, treat it as a red flag, not a gift. Either it is a scam (they will ghost after shipping garbage, or never ship at all), or it signals desperation that usually means quality or solvency trouble downstream.

We have seen OA work beautifully — one client we'll call Marco started on 30/70 T/T, earned OA 60 after nine clean orders, and it transformed his cash flow. But it was earned, over more than a year. Anyone handing it to you on day one is not doing you a favor.

05 Which to Use: New Buyer vs Repeat Buyer

This is the question every client actually wants answered. The honest version, in one table:

The pattern: start safe, earn flexibility. The goal is not to maximize how little you pay up front — it is to make sure the factory has to perform before you hand over the bulk of the money.

06 Red Flags in Payment Negotiation

Payment is where scams announce themselves. The signals we never ignore:

• "Just pay 100% in advance, it's standard." It is not standard for a new relationship, and it is the opening line of most advance-fee scams.
• A stranger offering OA 60/90 unprompted. Earned trust, not a greeting.
• Pressure to use weird channels — gift cards, crypto, a "personal" Wise/PayPal account instead of a company one. Walk away.
• Prices 30%+ below every comparable quote paired with relaxed payment terms. They are not being generous; they are racing to get your deposit.
• Refusal to accept inspection before the balance. A legitimate factory expects you to check the goods. One that blocks verification is hiding something.
• Bank details that "changed last minute" after you have already negotiated — a classic mid-transaction scam. Always re-confirm via a second channel.

Our full guide to avoiding China supplier scams covers these patterns in detail, with the exact verification steps we run before any wire leaves a client's account.

07 Practical Playbook

None of this means avoid China. It means pay like someone who expects to be verified, not someone hoping to be trusted.

1. Put payment milestones in the Proforma Invoice. 30% on PI, 70% against pre-shipment inspection report (or copy of B/L). Written, not verbal.
2. Never release the balance without verification. Inspection report, or a live video call showing your labeled goods. No proof, no wire.
3. Match the method to the order size. Small and new → T/T with inspection. Large and new → add L/C. Repeat and clean → earn OA.
4. Confirm bank details twice. Once in the PI, once by a second channel before transferring. Mid-deal "our account changed" is a scam.
5. Let a transparent agent carry the risk layer. A good sourcing partner inspects before the balance is released and verifies the factory — which is exactly the safety T/T alone does not give you. For what that runs, see what a China sourcing agent costs: transparent fees, no mystery line items.

Honest limit: no method makes factory risk disappear. L/C costs money and still doesn't guarantee quality. OA is earned, not given. T/T is cheap but trusts. The win is structuring payment so the factory has to perform before you pay — and verifying, every single time.

08 China Supplier Payment Terms — FAQ

09 Conclusion

The way you pay a Chinese supplier is not paperwork — it is your first and strongest protection. T/T (usually 30/70) is the cheap default but trusts the factory; L/C at sight adds bank-backed safety at 1–3% cost but guarantees documents, not goods; OA 30/60/90 is the best cash flow but is earned trust, never a day-one offer. For a first order, 30/70 T/T with the balance released only after verification is the safe path. Refuse 100% advance to strangers, be suspicious of unsolicited OA, and confirm bank details twice.

If you would rather have someone verify the factory and release payments against proof on your real purchase order, my team at Youna Global does exactly that — transparent fees, inspection before the balance, no mystery line items. When you are ready, we will help you structure payment so the factory has to perform before you pay.