Deposit and balance: how supplier payment terms work

Almost every order from a Chinese supplier splits the payment in two: a deposit to start production, and a balance before the goods leave the factory. The most common split you will hear is 30/70, meaning 30 percent now and 70 percent before shipping. Knowing how these terms work, and where to push, is one of the cheapest forms of protection you have as a buyer.

Why suppliers split the payment

A factory does not want to buy raw materials and run a production line for a stranger who might vanish. You do not want to send the full amount for goods that do not exist yet. The deposit and balance structure shares that risk. The deposit funds the run; the balance is leverage you hold until the goods are made and, ideally, inspected.

The common splits:

• 30/70 is the default for most manufactured goods.
• 50/50 appears on smaller orders or with a supplier who does not know you yet.
• 100 percent up front is sometimes asked for cheap, fast-moving stock. Treat it as a risk to weigh, not a normal term, especially with a new supplier.

What to actually agree, in writing

A term is only as good as what it is tied to. Before any money moves, pin down:

1. The split, as a clear percentage and RMB figure for each stage.
2. What triggers the balance. "Before shipping" is vague. "After I approve inspection photos" or "after a third-party inspection passes" is specific and protects you.
3. The lead time, so you know roughly when the balance falls due.
4. What the price covers, goods only or including domestic freight to your forwarder.

Put all of this in a written message or, better, a short purchase contract. A handshake on WeChat is not something you can lean on later.

Tie the balance to inspection

This is the single most useful habit in the whole process. The balance is your only real leverage, so do not give it up before you know the goods are right.

The deposit gets production started. The balance should never move until you have eyes on what was made.

Arrange a pre-shipment inspection and make payment of the balance conditional on it passing. You do not have to fly to China to do this; our guide on pre-shipment inspection without flying to China explains how a third-party inspector reports back to you. Pair that with an understanding of AQL sampling so you know what a "pass" actually means.

If you release the balance and then find the goods are wrong, you are negotiating for a refund with money already gone. If you hold the balance, you are negotiating from strength.

How to phrase the inspection trigger

Suppliers are used to this and most will not push back, but the wording matters. A loose line like "I will pay the balance before shipping" gives you nothing, because shipping can begin before you have seen anything. Tie the trigger to a concrete event you control:

• "Balance is due after I approve the pre-shipment inspection report."
• "Balance is paid once the third-party inspection passes at the agreed quality level."

Put a number on the quality level too, rather than leaving "good condition" to interpretation. This is where AQL sampling earns its place: agreeing an acceptable quality level up front means "pass" and "fail" are not arguments, they are arithmetic. A supplier who agrees to a clear inspection trigger is usually a supplier confident in their own goods, which is a quiet signal in your favour.

Protecting yourself on the deposit

The deposit is the riskier payment, because the goods do not exist yet. To keep that risk small:

• Keep the first deposit modest. A new supplier who insists on a large deposit on order one is asking you to carry all the risk.
• Settle to the same verified account for both stages. If the balance request comes from a new account, stop and reconfirm. Account switches between deposit and balance are a known warning sign.
• Confirm the recipient name before each payment, not just the first. See getting the recipient name right.
• Vet the supplier first. Good terms cannot rescue a bad factory. Run the checks in how to vet a 1688 supplier before you commit.

A clean two-stage settlement

Here is how a careful order pays out:

1. Agree the split, lead time and inspection trigger in writing.
2. Settle the deposit in RMB and keep the receipt.
3. Production runs. You stay in touch and ask for progress photos.
4. Arrange inspection near the end of the run.
5. Inspection passes, you approve, and only then settle the balance.
6. File both receipts with the matching invoice for your records.

When a supplier pushes for more up front

Sometimes a supplier asks for a bigger deposit than you are comfortable with, or for the full amount before production. This is not always a red flag; on very low-margin, fast-moving stock a factory genuinely cannot float your order. But it does shift the risk onto you, so weigh it honestly. If you do not know the supplier yet, a large up-front payment is exactly the situation where vetting matters most, and where a small test payment at least confirms the money lands where it should.

A reasonable middle path is to negotiate the split rather than accept the first number. You might offer a slightly larger deposit in exchange for a firm inspection trigger on the balance, or agree a smaller first order at the supplier's preferred terms to build trust before you scale up. Terms are part of the negotiation, not a fixed rule, and the same instincts that help on price help here too, as we cover in negotiating with Chinese suppliers.

Each stage is just one payment commissioned from Naira. When the deposit or the balance falls due, you can make a request, lock the rate, and we settle the RMB to the supplier's Alipay. Holding the balance until inspection is the discipline; the settlement itself is the simple part.