When it comes to payment methods, our business manager will recommend a payment method that suits both parties based on the actual situation. No matter which payment method is used, mutual trust is required. FNT Steel Furniture is one of the largest steel furniture manufacturer and exporter in China and is a reliable partner.
1. TT (Telegraphic Transfer)
- TT (Telegraphic Transfer) : The buyer pays directly through bank transfer.
- 100% Advance Payment
- Method : The buyer pays the full amount before shipment.
- Features : Safest for sellers, but highest risk for buyers (need to fully trust the seller).
- Applicable scenarios : small transactions, new customers, or when the buyer’s credit status is unclear.
2. Letter of Credit (L/C)
- Letter of credit, bank guaranteed payment, the seller can receive payment by submitting documents that meet the requirements of the letter of credit. It is highly secure but the cost is relatively high.
- Method : The bank acts as an intermediary and pays the seller based on documents (such as bills of lading, invoices).
- Type: Sight L/C : Bank pays upon seeing the documents. Usance L/C : Deferred payment (e.g. 30/60/90 days).
- Features : Balances the risks of both parties, but the procedures are complicated and the fees are high (bank fees are about 1%-3%).
- Note : The terms of the letter of credit (such as the “soft terms” trap) must be strictly reviewed and the documents must be consistent .
3. Documentary Collection
- Method : The seller submits the documents through the bank, and the buyer collects the documents after payment or acceptance.
- Documents against payment (D/P) : The buyer can pick up the goods only after payment.
- Documents against acceptance (D/A) : The buyer can collect the documents upon acceptance of the bill of exchange (higher risk).
- Features : Lower cost than letter of credit, but the bank does not guarantee payment.
4.Installment Payment
- Method : Payment in stages according to production/delivery progress (such as 30% deposit + 70% balance).
- Applicable scenarios : long-term orders such as customized products and large equipment.
5.Open Account (O/A)
- Method : The seller ships the goods first, and the buyer pays after the agreed payment period (such as 30-90 days).
- Features : Buyers have an advantage and sellers have high risk (buyer’s credit needs to be evaluated).
- Applicable scenarios : long-term cooperation and old customers with good credit.
6.Combined Payment
A. Common combinations :
- 30% T/T + 70% L/C : Reduce the L/C amount and reduce the fee.
- Deposit + balance payment upon seeing the copy of bill of lading : e.g. 30% prepaid, 70% payment upon seeing the copy of bill of lading.
B. Other emerging approaches
Cross-border third-party payment (such as PayPal, Stripe): suitable for small B2C or sample orders, but the handling fee is high (about 3%-5%).
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