Guide
Guide
T/T payment: how to pay a supplier in China, and what to check first
When a supplier in China asks for payment by T/T, it is asking for a bank transfer, usually a deposit when the order is confirmed and the balance later. This guide covers how the transfer works, what each payment should be tied to, the checks to make before any money leaves your account, and who you pay when a trading company or a buying agent sits between you and the factory.
The basics
What T/T means on a supplier's invoice
T/T stands for telegraphic transfer: an international bank transfer from your account to the supplier's. Most US buyers would call it a wire transfer, and in practice it is the same thing. On a proforma or commercial invoice, "T/T" names how you pay. The payment terms printed beside it say when each part is due.
To send one, your bank needs the beneficiary's name exactly as the supplier's bank holds it, the account number, the name of the bank and its SWIFT code, the amount and a reference. Use the invoice number as the reference, so the supplier can match the money to the order.
On the way, the money can pass through one or more banks, and each of them can take a charge out of it. Agree with the supplier who pays the bank charges at each end, so the invoice is paid in full and the supplier is not left short. When the transfer goes, your bank gives you a confirmation with its own reference number. Send a copy to the supplier with the invoice number. That copy is what suppliers mean when they ask for the "TT copy".
Payment terms
Deposit and balance: what each payment should be tied to
Suppliers usually ask for a deposit when the order is confirmed and the balance later. The split is agreed on each contract, so this guide gives no figure. Before each payment, you should be holding something that shows what it pays for.
| Payment | When suppliers usually ask for it | What to hold before you send it |
|---|---|---|
| The deposit | When the order is confirmed, before production starts | A signed contract or proforma invoice that names the seller, the specification, the quantity, the price and the date, plus the sample you approved if there is one. If the product is made to your design, the same paper should settle whose design it is. |
| The balance, before the goods ship | When the goods are made and packed | A check of the finished goods against the approved sample and the specification, made by you, by an inspector you book or by the company running the order. The packing list. |
| The balance, against the shipping documents | After the goods have shipped | A copy of the bill of lading that names your goods and the quantity. The originals, or the release of the cargo, follow your payment. |
| Everything in advance | Usually for samples and small first orders | The same name checks as any other payment, set out in the next section. |
Settle any change you want before you pay the deposit, because once production starts a change usually costs time and money. The steps are in how a custom order runs.
If a supplier asks for the whole amount up front on a production order, ask what a deposit and a balance would each be tied to instead, and decide from the answer.
Before you pay
Five checks before you send money
A bank transfer is hard to pull back once it has gone, so the checks happen before you send it. They apply to the deposit, the balance and anything paid in between.
Match one name in three places
The seller on your contract, the company on the invoice and the account holder on the bank details should be the same company, spelled the same way. If one of them is different, stop and ask before you pay.
Ask why before you pay anyone else
A supplier may ask you to pay a personal account, or a company other than the one you signed with. Ask for the reason, and get the request in writing from the company on your contract, before any money moves.
Call before you act on new bank details
New bank details sent by email are a known fraud on businesses that pay suppliers abroad, and the FBI's Internet Crime Complaint Center (IC3) has warned about it for years. Call the supplier on a number you had before the email arrived, never one written in it. A push for secrecy or speed is a reason to slow down.
Search the name
Look up the company you pay, and the one you contract with, in the Sanctions List Search run by the US Treasury's Office of Foreign Assets Control (OFAC). US persons may not deal with anyone on its Specially Designated Nationals list, or with a company that listed parties own half or more of. Your bank screens payments too, and one that matches is blocked or rejected.
Keep the paper
File the contract, the invoice, the bank's confirmation and the emails that set the terms. If a payment goes wrong, your bank and IC3 will ask for the beneficiary's name, bank and account number, and the dates and amounts you sent.
In China
What happens at the supplier's end
The transfer lands at the supplier's bank in China, where China's foreign exchange rules take over. The State Administration of Foreign Exchange administers them. Under the State Council's Regulations on Foreign Exchange Administration (Decree No. 532, Article 12), a payment for goods has to rest on a genuine transaction, and the bank handling it reviews the documents behind it.
On your side, keep the payment and the paperwork matched. Pay from your company's account, pay the company named on the invoice, and put the invoice number in the reference.
Who you pay
When a trading company or a buying agent sits between you and the factory
Whose account the money goes into depends on who sells you the goods.
| Question | Buying from a trading company | Using a buying agent |
|---|---|---|
| Who you contract with for the goods | The trading company | The factory |
| Who you pay for the goods | The trading company, which then pays the factory | The factory, directly |
| How the company in the middle is paid | A margin inside the price | A fee, on its own invoice |
| Whose name is on the bank details for the goods | The trading company's | The factory's |
| Where the five checks apply | To the trading company | To the factory, and separately to the agent's fee invoice |
If an agent asks you to pay for the goods into its own account, you are in neither column. Ask which arrangement you are in, and get the answer in writing before you pay.
With us, every quote names one of the two. When we sell you the goods, you pay us, the company named at the top of the quote, on the terms written on it, and we buy from the factory. We act as your buying agent when you name the factory, or want to contract with it and pay it yourself. Then you sign with the factory and pay it directly. Its invoice comes to you at cost, and our fee is a separate invoice. If you need to pay a US vendor, say so and we quote from our US company. More on which company invoices you, and how we are paid.
Alternatives
Other ways to pay, and what each one changes
Most suppliers in China ask for a transfer. These are the other ways to pay, and each one changes when the money is released, and against what.
Use a letter of credit
Your bank pays the supplier when the supplier presents the documents the credit names, under the ICC's rules for documentary credits (UCP 600). It takes more paperwork than a transfer, and the banks charge for it. Ask your bank's trade finance desk whether it suits the order.
Hold the money in escrow
A third party holds the payment until an agreed event, such as delivery or a passed inspection. Before you rely on it, ask who holds the money and exactly what releases it.
Pay through a marketplace
Some marketplaces cover orders that are placed and paid on them, on their own terms. Read what those terms cover, and what they leave out, before you count on them.
Pay online for a sample
Some suppliers take an online payment for a sample or a small first order. The name checks above still apply.
- How we workThe two arrangements, which company invoices you, and how we are paid.
- Contract manufacturingThe steps of a custom order, from the drawing to the delivery.
- Landed cost calculatorThe unit price is one line. Add up the rest of what the order costs.
- China sourcing servicesWhat we handle, stage by stage.
Questions
Questions buyers ask
What is a T/T payment?
A telegraphic transfer: a bank transfer from your account to the supplier's. On an invoice, "T/T" names how you pay, and the terms beside it say when each part is due. It is the same thing as a wire transfer.
How do I make a T/T payment?
Give your bank the beneficiary's name exactly as the supplier's bank holds it, the account number, the bank's name and SWIFT code, the amount, and the invoice number as the reference. Check first that the name matches the company on your contract and on the invoice. Once it has gone, send the bank's confirmation to the supplier.
Is T/T payment safe?
A transfer is hard to recall once it has gone, so the protection comes from what each payment is tied to and from what you check before it leaves. Run the five checks before you send money on every payment, the first deposit included.
What does it mean when a supplier asks for the full amount by T/T before production?
It means payment in full, in advance. That is common for samples. On a production order, ask what a deposit and a balance would each be tied to instead: the deposit to a signed contract, the balance to a check of the goods or to the shipping documents.
What is the best way to pay a supplier in China?
It depends on the order and on what you can check before each payment. A bank transfer, a letter of credit, escrow and a marketplace's payment protection each release the money at a different point. Pick the one that lets you see what you are paying for before the money leaves your hands.
The supplier says its bank details have changed. What should I do?
Don't pay on the strength of the email. Call the supplier on a number you had before the message arrived, and ask the company on your contract to confirm the change in writing. If the request feels rushed or secret, wait.
What should I do if I paid the wrong account?
Call your bank straight away and ask it to recall the transfer. Then file a complaint with the FBI's Internet Crime Complaint Center at ic3.gov, giving the beneficiary's name, bank and account number and the dates and amounts. The sooner your bank hears, the better its chance of stopping the money.
Do I pay the factory or the trading company?
You pay whoever sells you the goods. Buy from a trading company and you pay the trading company, which pays the factory. Use a buying agent and you contract with the factory and pay it directly, with the agent's fee on its own invoice. With us, the quote names the arrangement and the company that invoices you, and if you need to pay a US vendor, we can quote from our US company. See how we work.
Request a quote
Get a quote that says who you pay, and when
Send the product, the quantity and the date. We reply within 1 business day, and the quote names the company that will invoice you, the arrangement you are in and the payment terms for your order.
- Reply within 1 business day
- Landed cost, itemised
We take on the orders we can do well, and we will say so if yours isn't one of them.
