How to Negotiate Sticker Payment Terms: T/T Deposit, L/C and the Payment Cadence

Payment terms are the touchstone of trust between buyer and seller. The factory fears making goods it is not paid for; the buyer fears paying and not receiving them. Clarifying the two most common methods and their risks helps both sides talk.

1. T/T Deposit: The Most Common, but Split It

• Common structure: 30 percent deposit to start, 70 percent against the bill of lading copy or before shipment
• Why split: full prepayment leaves the factory unbound, full post-payment leaves the buyer unprotected — 30/70 is the balance
• Deposit is negotiable: 30/70 for new buyers, reordering regulars can move to 20/80 or payment against documents

2. Letter of Credit (L/C): Strong Buyer Protection, but the Factory Must Know How

A letter of credit substitutes bank credit for factory credit: the buyer is paid against documents, and the bank may refuse payment on a mismatch or late shipment. Strong protection for the buyer, but it demands zero defects in documents — bill of lading, invoice, packing list, certificate of origin, any one not matching the L/C and the bank rejects. So an L/C is not worth it on small orders, where the document and bank fees outweigh the value.

3. Trade-offs Between the Two

• T/T fits: regular buyers, small orders, urgent jobs on tight lead time
• L/C fits: large first orders with new buyers, buyer company policy mandates it, or cross-border trust is low
• Middle ground: small by T/T, large new buyers can split into part T/T and part against documents to lower both sides risk

4. Payment Cadence for a New Buyer First Order

• Take deposit before tooling: tooling fee and first material are covered by the deposit, keeping factory risk contained
• Collect balance before shipment or against B/L copy: goods title stays with the factory until paid
• Use escrow with care: platform escrow protects the buyer but lengthens the factory collection cycle
• Loosen for reorders: once trust is built, negotiate a friendlier cadence

Yikang Payment Policy

• Standard T/T: 30 percent deposit to start, 70 percent before shipment or against B/L copy
• Large new buyers: part T/T plus part L/C negotiable, documents prepared by us to the terms
• Reordering regulars: based on the track record, can relax to 20/80 or payment against documents
• RMB and USD settlement supported, invoices and certificates of origin issued to target market requirements