Paying a Chinese Supplier Safely: T/T, L/C

For most first-time importers the machinery itself is the easy part — deciding how to send money to a supplier you have never met is what keeps people awake. This guide explains the payment methods used in the compact machinery trade, what protection each one gives you, and the specific warning signs worth walking away from.

The three payment methods you will be offered

1. Telegraphic transfer (T/T) — the default

Almost every machinery order is settled by bank transfer, usually on a split schedule: a deposit to start production and the balance before the container is released. Typical structures in this trade are 30% deposit with 70% before shipment, or 50/50 for smaller orders.

Why split payments matter: the deposit commits the factory to buying materials and booking production, while the balance gives you leverage until the machines are built and inspected. A supplier demanding 100% upfront removes that leverage entirely.

What to check before any transfer:

The bank account name must match the company you are contracting with. This is the single most important rule. If the invoice shows one company name and the beneficiary account shows another, stop and ask why in writing.
Be sceptical of last-minute account changes. Intercepted email is a real and common fraud: a message claiming the bank details have changed, arriving just as you are about to pay. Confirm any change by a second channel — a phone or video call to a number you already had, never a number from the suspicious email.
Ask for the beneficiary bank’s SWIFT code and confirm the country matches the supplier’s stated location.

2. Letter of credit (L/C) — for large orders

With an L/C your bank pays the supplier only against a defined set of documents — typically the bill of lading, commercial invoice, packing list and any certificate of conformity. The supplier gets certainty of payment; you get certainty that the goods shipped.

An L/C makes sense on large orders, or when you are dealing with a supplier you have not worked with before and the amount is significant. It is not free — banks charge issuance and amendment fees, and the document requirements must be drafted precisely. A minor mismatch between the L/C terms and the actual documents can cause a discrepancy that delays payment. If you go this route, keep the required document list short and unambiguous.

3. Escrow and platform protection

Some B2B platforms hold funds until you confirm receipt, which gives useful protection on a first order. The trade-off is cost, slower release and, in some cases, limits on how much of the order is covered. Treat it as a first-order bridge rather than a permanent arrangement.

What a normal payment schedule looks like

On a typical machinery order you should expect something like this:

Before production — deposit of 30–50%, against a proforma invoice and a signed specification.
During production — no further payment.
Before shipment — balance, released after you have seen inspection photographs or a pre-shipment inspection report.
After arrival — nothing beyond agreed port and clearance charges.

A supplier who asks for the balance before showing you the finished machine, or who cannot produce photographs of the actual units you ordered, is asking you to take all the risk.

Warning signs worth walking away from

A price far below every other quotation. In a competitive trade, a quote 30% under the market is either a different specification, a bait price that rises later, or not a real offer.
Refusal to show the machine. No photos, no video, no live call from the production floor. You are entitled to see what you are buying.
Pressure to pay outside normal channels — a personal account, a third-party company, or a payment app instead of a business bank transfer.
No company details. A supplier who will not give a registered company name, business address or a landline is not one you can hold to a contract.
Documents that do not match. Company names, addresses or bank details differing between the quotation, proforma invoice and contract is a red flag, not a clerical detail.
Unwillingness to put the specification in writing. The specification — engine brand, dimensions, hydraulic configuration — is what you are paying for. It belongs in the contract.

Practical protections that cost nothing

Insist on a proforma invoice showing the company’s registered name, address, bank details, the exact models and the payment schedule.
Put the specification in the contract and state that the machines must match it, with photographs as evidence before shipment.
Ask for pre-shipment photographs of each unit with its serial number, ideally with the container loading process documented.
Request the conformity documents for your market — the EPA certificate of conformity for the United States or the CE declaration for the European Union — before releasing the balance.
Start with one container. A first order is a test of the supplier’s communication, documentation and delivery. Scale after it works.

Why factories accept split payments

It is worth understanding the other side. A deposit lets the factory buy engines, steel and hydraulics without financing your order from its own cash, which is exactly why the deposit buys you a lower price. The balance before shipment exists because once the container has sailed, recovering payment across borders is slow and expensive for a small manufacturer.

That is the shape of the compromise: you accept some risk before shipment, the factory accepts it during production. A supplier who understands this and documents each stage properly is easier to work with than one who simply insists on the maximum upfront.

Frequently asked questions

What deposit is normal for machinery orders?

30–50% before production with the balance before shipment is standard in this trade. Larger or repeat orders are often more flexible than first orders.

Is a letter of credit worth it?

For a large first order, usually yes — the bank checks documents on your behalf. For small orders the bank fees and paperwork often outweigh the protection.

How do I verify a supplier’s bank account?

Check that the beneficiary account name matches the contracting company exactly, confirm the SWIFT code’s country, and verify any account change through a separate communication channel you already trust.

Should I pay 100% upfront for a discount?

Only with a supplier you have already ordered from successfully. On a first order it removes your leverage at the exact moment you need it most.

What documents should I receive before paying the balance?

Photographs of the finished units with serial numbers, the packing list, and the conformity documentation for your market — plus the loading photographs if the container is already being filled.

Want to see how we handle a first order? Ask us for a proforma invoice and a production schedule — it shows the company details, the specification and every payment stage in writing.

How to Pay a Chinese Machinery Supplier Safely