Payment Terms and Trade Security: What First-Time Importers Should Know
The Standard Structure: Deposit + Balance
Most wholesale orders follow a deposit-and-balance structure rather than full payment upfront or full payment on delivery. A typical arrangement is a deposit (commonly in the 30-50% range) paid to confirm the order and begin production, with the balance due before shipment or against shipping documents. The exact split is negotiable and often depends on order size and whether it's a first order or part of an established relationship.
Why This Structure Exists
It balances risk on both sides: the factory needs assurance the buyer is committed before tying up production capacity and materials, and the buyer needs assurance the goods will actually be produced and shipped before paying in full. Neither full-prepayment nor full-payment-on-delivery is standard practice for a reason — each shifts all the risk to one party.
Payment Methods and What They Mean for You
- Bank wire transfer (T/T) — the most common method for wholesale orders, straightforward but offers limited built-in dispute protection once sent
- Letter of Credit (L/C) — more common for larger orders, provides stronger structural protection since payment is contingent on documented proof of shipment, but adds complexity and bank fees
- Trade assurance / escrow-style protections — where available, funds are held until agreed conditions are met, reducing exposure particularly for first-time transactions with a new supplier
What to Confirm Before Sending a Deposit
- Get the payment terms, quantities, specifications, and agreed price in writing before transferring anything — a written record matters if a dispute arises later
- Confirm the bank account details directly with the supplier through a verified channel, not just an email — payment-redirect fraud (where a scammer intercepts communication and provides different bank details) is a real and recurring risk
- For a first order with a new supplier, keep the deposit percentage on the lower end of typical rather than the higher end
How This Connects to Supplier Verification
Payment security and supplier verification aren't separate concerns — a verified factory with an established track record represents meaningfully less payment risk than an unverified one, regardless of which payment method you use. This is part of why the supplier vetting described in our article on how we select factories matters beyond just product quality.
Have questions about payment terms for a specific order? Get in touch with the details and our team will walk through the structure with you.