T/T stands for Telegraphic Transfer. In other words, an international wire of funds from the buyer’s ngân hàng lớn the seller’s bank.

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When a Chinese supplier asks for a T/T payment, what they really mean is they want a wire transfer. (Technically, a T/T is not exactly the same as a wire transfer through the SWIFT system, but the vast majority of people think of them as the same thing.)

A wire transfer based on SWIFT is the most common payment method in international trade with Asian countries. It typically takes 3-5 working days to clear, and generally costs between 25 and 50 USD, depending on your agreement with the commercial department in your bank.

What is the most common payment term requested by Chinese suppliers?

The most comtháng payment method is a ngân hàng wire that works this way:

You have the supplier develop sample(s) until you are confident they know exactly what you want.You skết thúc a 30% deposit (by T/T) before production starts.Your supplier (the manufacturer và exporter) purchases the components and/or materials, & arranges productionYou work with a unique assurance firm to inspect product quality (this is optional but usually a good idea).You skết thúc the remaining 70% (by T/T) before shipment.The supplier ships the goods và sends you the documents by express courier.

In graphical form, it looks lượt thích this:

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What is another common, & better, payment term?

It is quite similar, except for the kết thúc of the process.

Once the supplier confirms the goods are ready, send an inspector to lớn check quality (again, not a must, but highly advised)If quality is OK, release the goods (allow the goods to be shipped out) — this works best if you purchased under FOB termsOnce the goods are on the ship, the supplier gets the Bill of Lading (B/L), & sends you a copy of itIf the product name, quantity, etc. are all fine on the bill of lading, you send the final payment to the supplierOnce the supplier receives the payment, they send you the original B/L

It looks like this:

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Why is it better?

The buyer knows the goods have sầu been shipped out before paying the remainder.The supplier knows the buyer can only take possession of the goods after the original bill of lading has been sent.

Can you negotiate this term? If you insist on it from the very start, và if your suppliers are motivated to work with you, probably yes. If you come out as a beginner và your orders are very small, probably not.

How lớn vày a T/T payment?

Contact the commercial department of your ngân hàng, tell them you need to wire (for example) 25,000 USD khổng lồ a company in Đài Loan Trung Quốc, và they will generally give sầu you a form to lớn fill out. If you bởi T/Ts frequently, your bank probably has an ‘mạng internet banking’ application that will save you time.

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Your supplier will probably sover you a pro forma invoice that includes their bank tài khoản information. I strongly suggest you ask for that information earlier (as part of your pre-qualification of a potential supplier). Many buyers have been scammed by hackers who send invoices with their own bank account information…

I shot a short Clip that shows how to lớn fill out a T/T application form:

After you have sầu done this, take a screen shot, or get a digital copy, & send it khổng lồ your supplier.

Important tips:

Make sure khổng lồ avoid any misspelling, which might cause the payment instruction lớn be held in limbo for weeks!You will need lớn write the company name in English, not in Chinese. Don’t try lớn bởi your own translation job, even if your written Chinese is excellent! It has to match exactly the English name under that is registered in the seller’s bank records.If the company name is too long, keep writing it in the “address 1” field. This is sometimes mentioned on the T/T forms of banks that work a lot with China:

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How khổng lồ negotiate better payment terms?

There are various ways you might be able to negotiate for payment of some (or all) of the amount after shipment.

Your company is well established and famous — think Apple or Disney. The risk of the buyer’s company defaulting is much lower. And the seller want to boast about that prestigious customer in order khổng lồ get more business.You arrange financing of your suppliers — as the buyer, if you have sầu relatively strong financial guarantees và you purchase more than 1 million USD a year, you can work with a company (or a ngân hàng department) specializing in trade assurance solutions. Your supplier gets the cash when they need it, và your account is debited much later.You have a buying office in China — having a svào presence in-country does help. A supplier that hasn’t been paid in time can pay you visits và take different measures lớn push you for faster payment.

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Renaud Anjoran has been managing his unique assurance agency (Sofeast Ltd) since 2006. In addition, a passion for improving the way people work has pushed hlặng lớn launch a consultancy to lớn improve factories and a web application to manage the purchasing process. He writes advice for importers on qualityinspection.org.