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2026-10-30
# Chinese Supplier Payment Terms: TT, LC, and Escrow Compared
The standard Chinese supplier payment term is 30% TT deposit with 70% balance against the copy of the bill of lading, but orders above $50,000 justify letters of credit, and first transactions with unverified factories warrant escrow. Payment structure is risk allocation: every term shifts fraud and quality risk between buyer and supplier, and the right choice depends on order size, relationship history, and your tolerance for cash tied up. This guide compares the three main instruments with concrete costs and use cases.
TT is a direct bank transfer, and its dominant structure in the ginseng trade is 30/70:
Typical variants and when they appear:
| Structure | Who Benefits | Use Case |
|---|---|---|
| 30/70 against B/L copy | Buyer | Established relationships, standard orders |
| 30/70 before shipment | Supplier | First orders, custom OEM production |
| 100% against B/L copy | Buyer | Long partners with credit history |
| 100% advance | Supplier only | Very small orders below $2,000 |
TT costs are minimal ($20-50 per wire) and speed is same-day to two days. The risk is total: funds wired are recoverable only through goodwill or legal action. That is why supplier verification — the audit discipline in ginseng supplier audit checklist — must precede any deposit, and why factory bank accounts must match the contracted legal entity exactly (mismatches are the classic fraud tell).
A letter of credit routes payment through banks: the buyer's bank pays the supplier only when shipping documents exactly match LC terms. It is the right instrument when:
LC drawbacks: document discrepancy risk (a misspelled port name can delay payment), 7-14 days of processing overhead, and some smaller factories refuse LCs entirely. Confirm factory LC experience before committing — a factory's first LC is usually a slow one.
Escrow services hold funds until goods pass inspection. Practical tiers:
| Instrument | Cost | Best For |
|---|---|---|
| Alibaba Trade Assurance / platform escrow | Free-3% | First trial orders, sample-plus-pilot combos |
| Dedicated escrow services | 1-3% | Mid-size first orders $5,000-30,000 |
| Inspection-gated release (escrow + SGS/BV) | +$300-600 inspection | New supplier, first container |
Escrow pairs naturally with the trial-order strategy in ginseng factory sample order process and small moq trial order ginseng: spend the savings on independent inspection rather than trusting platform ratings alone.
| Situation | Recommended Term |
|---|---|
| First order under $10,000, new supplier | Escrow or 30/70 against B/L copy |
| First order $10,000-50,000 | 30/70 + pre-shipment inspection |
| Order above $50,000, new relationship | Irrevocable LC at sight |
| Repeat orders, proven supplier | 30/70 TT (negotiate toward 20/80 or B/L-copy balance) |
| Annual contract with volume tiers | Quarterly TT + annual reconciliation |
Payment terms carry cost for suppliers — 100% advance financing your order means their cash flow funds your inventory. Fair-trade levers that work:
For orders under $10,000, platform escrow with independent pre-shipment inspection offers the best protection-to-cost ratio. For larger first orders, an irrevocable LC at sight plus third-party inspection is the professional standard.
Above $50,000-100,000, yes: fees of 0.5-1.5% buy document-gated payment protection and, with the right bank, 30-45 days of cash-flow deferral. Below that threshold, TT with inspection is cheaper and simpler.
Stop and resolve it before paying. Any mismatch between the contracting entity and the beneficiary account is a leading fraud indicator — require the account to match the business license or obtain a documented, notarized authorization.