L/C vs T/T: The Safest Payment Method When Importing From China

Payment terms are risk terms

When you import from China, the payment method is not just admin. It decides who carries the risk if something goes wrong. The two most common methods are T/T (telegraphic transfer, a bank wire) and L/C (letter of credit). Here is how they compare.

T/T (Telegraphic Transfer)

A direct bank-to-bank wire. Simple, fast and cheap, which is why most smaller orders use it. The risk sits in the timing.

• Common structure: 30% deposit up front, 70% balance against a copy of the bill of lading (so the balance is paid only once the goods are demonstrably shipped).
• Pros: low bank fees, fast, easy for both sides.
• Cons: the deposit is at risk if the supplier does not perform. Mitigate this by vetting the supplier and using a pre-shipment inspection before you release the balance.

L/C (Letter of Credit)

A bank guarantee. Your bank promises to pay the supplier only when they present shipping documents that exactly match the agreed terms. The risk shifts from you to the banks.

• Pros: strong protection for both buyer and seller; the supplier only gets paid on compliant documents, and you only pay against proof of shipment.
• Cons: higher bank fees, more paperwork, and documents must match the L/C exactly or the bank can refuse to pay. Small discrepancies cause delays.

Which should you use?

• Use T/T for smaller orders, trusted or repeat suppliers, and when you want speed and low cost. Protect the deposit with due diligence and inspection.
• Use L/C for large orders, first-time suppliers, or high-value shipments where the extra protection justifies the cost and paperwork.

A practical middle path

Many importers start new relationships with a modest T/T order (with inspection) to build trust, then scale up. For large repeat volume, an L/C formalizes the protection. Whatever you choose, put the terms in the contract: deposit, balance trigger, Incoterm, and what happens if goods fail inspection.

We accept both T/T and L/C and are happy to structure terms that protect you, whether you are buying our own mowers and sweepers or our wider machinery range. Ask us for a quote and proposed payment terms.