Payment Methods Ranked by Risk

T/T Advance Payment (100% upfront): Highest risk for buyer. Only use for small sample orders or with suppliers you have years of trust with. Never pay 100% upfront to a new supplier.

T/T with Deposit + Balance: Standard: 30% deposit to start production, 70% balance before shipment (against copy of documents). Reasonable for established relationships. Verify the B/L before sending balance.

Letter of Credit (L/C) at Sight: Bank guarantees payment when documents match L/C terms. Reduces buyer risk — but L/Cs have fees (0.5-1.5% of value) and strict document compliance requirements. One typo can cause rejection.

Documents Against Payment (D/P): Documents released to buyer only after payment. Lower cost than L/C, less formal. Still requires trust that goods match documents.

Open Account (O/A): Payment after delivery (30/60/90 days). Highest risk for supplier, lowest for buyer. Only for long-term trusted relationships.

Red Flags in Supplier Payment Behavior

🚩 Asking for 100% upfront from a new client
🚩 Bank account in a different country than the factory
🚩 Bank account in a personal name, not the company name
🚩 Pressure to use Western Union or unsecured transfer methods
🚩 "Special discount for cash payment" — this bypasses banking records
🚩 Refusal to provide a Proforma Invoice with company stamp

How to Verify a Supplier Before Paying

1. Verify the business license number on China's National Enterprise Credit Information Publicity System
2. Match the bank account name to the business license name — they must be identical
3. Request a recent Bill of Lading (not just a client list) — verifiable proof they have exported
4. Ask for a live video call from inside the factory — match the location to the license address
5. Start with a small trial order before committing to large volumes
6. Use a sourcing agent or inspection service for first-time orders

Dream Fireworks: Transparency First

We provide our business license, Safety Production License, and bank details before any payment. Our company name matches our bank account. Our factory in Liuyang is open for visits. We offer: 30% deposit + 70% against B/L copy (standard), L/C at sight (subject to bank approval), sample orders via T/T. We want long-term partnerships — not one-time transactions.