T/T (Telegraphic Transfer) is an international bank wire, funds move from the buyer’s bank to the factory’s bank in 1 to 3 business days. It is the dominant payment method for Chinese chemical exports because it is fast, cheap (USD 25 to 50 in fees), and well-understood on both sides. The default terms are 30 percent T/T advance, 70 percent T/T against B/L copy, meaning 30 percent on order confirmation, 70 percent when the bill of lading copy reaches the buyer (vessel has sailed but cargo is still on the water).
TT Advance
The deposit. Paid against the proforma invoice, typically 30 percent of the order value. Triggers the factory to begin production. Without the deposit the factory does not commit factory time, raw materials, or scheduling. Standard practice across the trade.
The deposit is at risk if the factory fails to produce or if the cargo never ships. For a new factory relationship, the deposit is the buyer’s first leverage check on factory legitimacy, a real factory invoices through a real corporate bank account in the factory’s legal name (not a personal account, not a Hong Kong shell). If the factory asks for the deposit to a different account name or a different bank than the one on the proforma, stop. That is the classic deposit-fraud setup.
TT Against B/L
The balance. Paid when the bill of lading (B/L) copy reaches the buyer, typically by email scan, after the vessel has sailed but before the cargo arrives at the destination port. The factory holds the original B/L until the balance T/T is confirmed; the buyer needs the original B/L to clear the cargo at the destination port. So the buyer must pay the balance before the cargo arrives or risk demurrage at destination while waiting for the original B/L.
This sequence (cargo sails → B/L copy emailed → balance paid → original B/L released) gives the buyer leverage. The cargo is committed to a sailing, the factory cannot recall it, and the buyer can verify from the B/L that the cargo actually loaded and the volume matches the contract before paying the balance.
TT Against Documents (less common)
A variant where the balance is paid against the full documentation set including the original B/L, COA, and inspection certificate, typically with the documents handled through the buyer’s bank. This is closer to an L/C in protection level but uses T/T for the actual money movement. Less common than 30/70 against B/L copy but appropriate for new factory relationships where the buyer wants more documentation control.
When T/T is the right call
T/T is the default for established factory relationships, for routine commodity chemical orders, and for any order where both sides have a working trust relationship. It is fast, cheap, and avoids the bureaucratic overhead of letters of credit.
When T/T is the wrong call
For a first order from a new factory at high order value (USD 100,000+), T/T puts the buyer’s deposit at risk against a relationship that has not been tested. Three alternatives reduce the risk:
- Smaller first order. Limit deposit exposure on the first transaction. Build to larger orders after one or two clean cycles.
- L/C at sight (Letter of Credit). Bank-mediated, more expensive (1-2 percent of order value in fees), slower, but eliminates deposit-fraud risk because the bank releases payment only against compliant shipping documents.
- Inspection-conditional T/T. Deposit reduced (10-15 percent), balance paid against SGS inspection certificate before vessel sailing. Splits the risk: factory has skin in the game from the smaller deposit, buyer holds payment until inspection clears.
Practical sourcing notes
For our buyers, we structure first-order T/T at 30/70 with the inspection certificate as a balance-payment trigger. The factory is paid 30 percent on order, 70 percent when SGS or BV issues a clean inspection certificate. This keeps payment standard from the factory’s perspective while giving the buyer a fail-safe before the cargo sails.
Related terms
L/C is the alternative payment instrument with stronger documentary protection. Proforma Invoice is the document against which the deposit T/T is paid. BOL is the document against which the balance T/T is paid.