A low unit price means very little if your payment structure leaves you exposed before goods are checked. The best supplier payment terms protect both sides: the factory has enough cash to buy materials and schedule production, while you keep enough leverage to correct defects, delays, or missing quantities before the balance is released.
For China sourcing, payment terms should never be copied from a supplier's proforma invoice without discussion. Terms need to reflect the order value, product complexity, supplier history, production lead time, inspection plan, and shipping method. A reliable factory will negotiate reasonable protection. A factory that demands full payment before production or refuses third-party inspection is giving you useful information early.
For many first orders, a 30% deposit and 70% balance after inspection, before shipment is the most practical starting point. It is widely understood by Chinese manufacturers and gives the supplier working capital to purchase raw materials. More importantly, it leaves most of your money unpaid until the goods are made and checked.
That does not mean 30/70 is automatically safe. If the contract simply says 70% before shipment, a supplier may request the balance after their own internal check, not after an independent inspection against your approved specifications. The payment milestone must state exactly what has to happen first.
A better wording is: 30% deposit after approval of the purchase order and production sample; 70% balance after passed pre-shipment inspection, receipt of inspection report and packing list, and before cargo release. The paperwork should identify the product, quantities, specifications, packaging requirements, delivery date, and defect tolerance. Do not leave those points in chat messages.
For repeat orders with a supplier that has delivered consistently, you may be able to improve terms. A 20% deposit and 80% after inspection is stronger for the buyer. In some cases, established buyers negotiate a small retention, such as 5% paid after the goods arrive or after shipping documents are issued. Suppliers rarely offer this to a new customer, but it can be realistic once you have a payment record and regular volume.
There is no single best arrangement for every order. A simple order of standard garments carries different risk from custom marble, hotel furniture, lighting with electrical compliance requirements, or machinery with installation parts. The more difficult a product is to resell or rework, the more carefully you should control approval and payment stages.
A 30% deposit and 70% after pre-shipment inspection is usually workable for standard products. For lower-value orders, suppliers may insist on full payment before release because bank transfer fees and administrative work make complex structures impractical. Even then, do not skip the inspection. Your leverage is limited after payment, but an inspection can stop a bad shipment from leaving the factory.
If you are buying stock items, confirm whether the supplier actually holds inventory. Many trading companies advertise ready stock but purchase only after receiving your payment. Ask for dated warehouse photos, stock records, and confirmation of the dispatch timeline. A deposit for goods that do not exist is not the same as a deposit for a scheduled production run.
Custom furniture, sanitary ware, tile, lighting, and construction materials often require molds, special finishes, customized packaging, or project-specific dimensions. Suppliers may ask for a higher deposit because materials have to be ordered specifically for your job. That can be justified, but only when the factory is verified and the product details are locked down.
For these orders, split the deposit when possible. For example, pay 20% after the contract and approved sample, then another 10% only after the supplier provides evidence that key materials have been purchased. This is not always accepted, but it creates a useful discussion about what your money is funding.
For large project orders, payment can be tied to production milestones: deposit after sample approval, a second payment after the first batch passes inspection, and final balance after the completed order passes pre-shipment inspection. This takes more coordination, but it reduces the chance that one late or defective batch holds up an entire container.
Your first order should be structured as a test, even if you expect a long relationship. Avoid paying 100% upfront to an unverified supplier simply because they offer a better price. A small discount does not compensate for a shipment that arrives with wrong materials, weak packaging, or missing certifications.
Before money changes hands, verify the legal company name, bank account name, factory address, production capability, export experience, and the identity of the person issuing the quotation. The beneficiary name on the bank account should match the contracted supplier. If a supplier asks you to send money to a personal account or an unrelated company, stop and get a written explanation before proceeding.
A supplier's quality report is useful, but it is not independent. Your contract should give you the right to inspect the goods before the final payment. The inspection needs a clear standard: approved sample, purchase order, product specifications, acceptable quality limit where relevant, carton marks, labeling, quantities, and packaging tests.
The timing matters. Inspect when at least 80% of the goods are completed and packed, with the balance substantially finished. Inspecting too early gives you a view of a prototype batch, not the order you will receive. Inspecting after the cargo is loaded gives you almost no practical room to fix a problem.
If the inspection fails, the contract should state that the supplier must rework or replace defective goods at its own cost and arrange a reinspection. Do not release the final balance based on a promise that corrections will happen later. Once the factory has been paid in full and the container has departed, your negotiating position becomes much weaker.
At Manor Sourcing, this is why physical factory visits and documented inspections matter. Photos, quantity checks, defect findings, and packaging results give buyers a record to use before approving payment and shipment.
Payment terms explain when money is paid. Shipping terms explain which party handles transport, insurance, export clearance, and risk at different stages. They are connected, but they are not the same thing.
For example, under FOB terms, the supplier generally handles export clearance and delivers goods on board the vessel at the named port. You still need to agree when the final payment is made and when the shipping documents are released. Under EXW, the buyer takes on more responsibility from the factory gate, which can create avoidable problems if you do not have a China-side freight partner.
Be particularly careful with original bills of lading. If the supplier controls the original document, they may control cargo release at destination. This is normal in many transactions, but the document arrangement should be understood before you transfer the balance. For shipments using a telex release, confirm in writing who authorizes release and when.
Bank transfer, often called T/T, is the standard method for direct factory orders in China. It is fast, familiar, and usually the most practical option. Its weakness is simple: once the money is sent, reversing it is difficult. That is why supplier verification, contracts, and inspection matter more than the transfer method itself.
Letters of credit can provide stronger documentary control for larger transactions, but they are expensive and paperwork-heavy. They work best where order values justify bank fees and both parties understand the document requirements. For small or mid-sized custom orders, an LC can cause more disputes than it prevents if the terms are not carefully managed.
Online platform payment protection may be useful for small trial orders, but do not assume it covers every quality disagreement or customized specification. Read the release conditions before relying on it. A claim process cannot replace clear contract documents and evidence from an inspection.
Some requests are not automatic proof of fraud, but they require closer checking. These include 100% payment before production, a sudden bank account change, payment to a personal account, a very high deposit for standard goods, and a supplier refusing inspection or written quality standards.
Another warning sign is a price that is far below comparable quotations paired with aggressive payment demands. The factory may be planning to substitute materials, cut packaging costs, or request extra money later. Low pricing without controls often becomes expensive after the container arrives.
The best response is not an argument. Ask for evidence, revise the payment milestone, and put the agreement in writing. A serious supplier will explain its position and work toward a structure both sides can operate.
For a first China order, start with this practical sequence: approve the product sample and specifications; sign a detailed purchase order; pay a 30% deposit to the verified company account; receive production updates; conduct a pre-shipment inspection; receive the report, packing list, and shipment details; then pay the 70% balance before cargo release.
If the order is high-value, highly customized, or tied to a construction deadline, add more checkpoints rather than increasing the deposit. Each payment should buy a measurable result: approved samples, confirmed materials, completed production, passed inspection, or released shipping documents.
The right terms do not come from pushing every supplier for the longest credit period. They come from making sure your money moves only when the factory has delivered the proof it promised. That is how you protect cash flow without starving a good supplier of the funds needed to make your order properly.
Manor Sourcing works on the ground in Guangzhou, Shenzhen, Yiwu, and Foshan — factory checks, sample approval, inspection, and freight handled by one team, with fees agreed in writing before any factory is contacted.
Get a Quote