What is the Best Way to Pay My Chinese Supplier?

After all the details of the product and the delivery date are confirmed, the most important thing is "how is the best way to Pay My Chinese Supplier".There are many kinds of payment methods in the daily business, each method of payment has advantages, but also has certain disadvantages, it depends on your order amount.

Let me introduce you to some of the more common terms of payment.  1. TT(Telegraphic Transfer)   Telegraphic transfer (T/T) is a method by which the remitter instructs the remitting bank to pay a certain amount to the payee of the remitting bank by telegram or telex. There are generally two forms.

1. The Pre-TT means that after the contract is signed, a part of the deposit is paid first, usually a 30% deposit in advance. After or, the production is finished, then inform the buyer to pay the remaining 70% to the suppliers, then deliver the goods and provide the full set of documents. In European and American countries appear more.
2. Another kind of TT, is that the supplier shall arrange production and shipment after receiving the deposit(normally around 20%, 30%, or 50%), after the goods have been shipped, then suppliers provide a copy of the documents to buyers to confirm. Finally , the buyer pays the remaining balance, and the suppliers arrange a telex release or send a full set of documents to buyers.

    Advantages: Simple operation, flexibility, and low bank charges. It usually takes 3-5 working days can arrive in our bank account.

     2. L/C( LETTER OF CREDIT )   A letter of credit is a written guarantee issued by the issuing bank to the beneficiary at the request of the applicant (buyer) and following, its instructions, which contains a certain amount and is payable within a certain period against the stipulated documents.

The letter of credit can be said to be an S/C guaranteed by the bank. As long as you follow the items in this contract one by one, you must pay the money to the bank if you provide the corresponding documents

  There are many review points of the letter of credit, and one discrepancy will cause high amendment costs and high bank charges. 
3. D/P( Document Against Payment)   This way: after the exporter has shipped the goods, the exporter will send the relevant documents (including B/L INVOICE P/L..). To the bank, the importer to the local bank to pay the bill, that is, the right to obtain the goods.

  4. D/A (Document Against Acceptance）   After shipping the goods, the exporter shall send the relevant documents (including B/L INVOICE P/L..) The buyer promises to pay the seller and the bank upon receipt of the bank payment notice, and then takes the documents from the bank to obtain the goods, which is riskier. This situation is a lot of risk for the seller, the generally small and medium-sized enterprises will not agree to this kind of payment.

  5. Western Union   This is the simplest and most convenient payment method, the buyer only needs to go through the seller's name and address to complete the payment, only need to provide the seller a control code or password, then the buyer can use an ID card to go to the bank to withdraw. There's a limit. It can't be $1,000 or $2,000 at a time. And the bank charge is also a bit high.

   6. Paypal  Paypal is similar to Alipay, but the amount is limited. Especially for Chinese sellers, the withdrawal fee is very high. Generally, a small amount can be paid through Paypal, like a sample fee. It will be convenient and fast.

   7. OA(Open Account Trade)  It's like a credit card, which means pay when it's due. In international trade, it is a kind of foreign trade payment method with great risk, and enterprises can generally be used for the good reputation of the old guests who can make  orders with them more than $1 million per year.

  You can choose and negotiate payment terms based on your annual purchase amount with your suppliers.1.≤ USD 1000, TT, Western Union, Paypal2.≤ USD 1 million, TT3.USD 1 million ≤ USD 5 million, TT or L/C4.≥ USD 5 million, TT, L/C, D/P, O/A(support to negotiate with seller)

  In daily international trade, the proportion of TT payment is the most common, because it is convenient, fast, and low bank charge, so many buyers and sellers choose it more.