30/70 is the industry default — and it was designed for the supplier's cash flow, not your risk. The fix is a principle, not a percentage: every balance payment tied to a verifiable event you can see before you pay.
Ask any sourcing manager for the standard payment terms with a Chinese supplier and you will get the same answer: thirty percent deposit, seventy percent against copy of bill of lading. T/T 30/70. It appears on proforma invoices so reliably that most buyers treat it as physics rather than as a negotiation.
It is not physics. It is a term — and like most default terms, it reflects the drafting preferences of the party who usually prepares the paper. In several years of reviewing China purchase contracts and untangling payment disputes, I have rarely seen a 30/70 structure that was designed around the buyer's risk. I have seen many that were designed around the supplier's working capital, with the buyer's protection as the residue.
This article is about doing it better. Not by inventing exotic terms the market won't accept — a structure the supplier won't sign protects nobody — but by applying one principle that separates payment structures that work from payment structures that merely look normal.
Understand the default honestly before you improve it. The 30% deposit covers the supplier's raw material outlay; the 70% balance before the goods are out of the supplier's control means the supplier is, in most cases, fully paid while the cargo is sitting in a container yard in Ningbo or Shenzhen, waiting for a vessel.
Run the exposure math from the buyer's side. At the moment you wire the balance "against copy of B/L," what have you received? A PDF. The copy B/L proves a container was loaded — it says nothing about what is inside it, whether it matches your specifications, whether it passed any inspection, or whether the shipping documents will ever be properly released to you. In practice, by the time the supplier has your 70%, your remaining leverage consists of their desire to keep your next order. That leverage exists right up until it doesn't.
This is not an argument that 30/70 is a scam — for repeat business with a proven supplier, it is a reasonable equilibrium, and insisting on more protection has a real cost in price and friction. It is an argument that the right structure depends on the deal profile, and that the default gets applied to deals where it fits badly: first orders, custom tooling, large values, suppliers with thin balance sheets.
Here is the test I apply when marking up a payment clause: for each installment, what fact can I verify before I wire — and what document proves it?
A payment milestone is only as strong as the event behind it, and an event is only as strong as the evidence you can check independently. "Production completed" is a claim. "Loading photos with container and seal numbers, timestamped, plus SGS report issued before B/L date" is a fact.
The second half of the principle: keep meaningful money behind the last verifiable event. A structure that pays 95% before the goods leave the supplier's premises has converted your contract into a hope. The balance is not just money — it is your working leverage to force pre-shipment inspection access, correct a failed inspection, or negotiate a remedy when quality comes in wrong. Suppliers understand this perfectly, which is why the balance percentage is the real negotiation, whatever the headline split says.
These are the events I build structures from, roughly in the order goods move through a shipment:
| Event | Evidence you can verify | What it proves |
|---|---|---|
| Contract signed | Executed contract with company chop | The deal exists; who you're dealing with |
| Raw materials purchased | Purchase invoices, material certs on request | Production has actually started |
| Production milestone | Dated photos/video, or on-site QC visit | Schedule is real, not a verbal assurance |
| Pre-shipment inspection | Third-party inspection report (SGS, BV, TÜV, Intertek) or your own QC agent's report, issued before payment | Quantity and quality against your spec — the single most valuable event in the structure |
| Container stuffed and sealed | Loading photos: empty, half, full, door closed, seal applied — container and seal numbers legible | What went into the box; tamper evidence |
| Cargo loaded on vessel | Copy B/L, then telex release or originals | Shipment happened; document chain started |
| Documents complete | Full document set per contract (invoice, packing list, CO, etc.) | Customs clearance and payment compliance |
| Arrival / installation / acceptance | Survey at discharge for bulk; commissioning protocol signed for machinery | Performance, not just delivery |
Not every deal needs every event. Every deal needs enough events that the supplier is never fully paid while the only thing you hold is a promise.
Three profiles cover most situations. Percentages are illustrative starting points for negotiation, not formulas.
Profile A — proven supplier, repeat order, standard catalog goods. The relationship is the security. A conventional structure is defensible: 30% on order, 70% against copy B/L. Add two cheap upgrades: loading photos with seal numbers as a contractual deliverable, and an annual or per-order spot inspection right. You are buying speed and simplicity, consciously trading some protection for a supplier you have tested.
Profile B — new supplier, or first order of a new product line. This is where 30/70 fits worst, because the thing it relies on — trust in the counterparty — is exactly what you don't have yet. Better: 30% on order; 40% against third-party pre-shipment inspection report and loading photos; 30% against copy B/L. The inspection event is non-negotiable in this profile. If a new supplier refuses any third-party inspection before final payment, you have learned something important before wiring, not after.
Profile C — large value, custom-made equipment, or long production cycle. Custom goods have weak resale value; if you walk away, the supplier is stuck with inventory only you could want — which is why suppliers rightly demand deposits here, and why you should be equally firm about performance evidence. A workable spine: 20–30% on order; 30% against witnessed FAT (factory acceptance test) or mid-production inspection with dated evidence; 30% against pre-shipment inspection and loading; 10–20% retained against installation, commissioning, or acceptance protocol — or against copy B/L if the goods are simple enough not to need on-site acceptance. For genuinely large custom projects, a bank guarantee or standby LC backing the supplier's performance obligations is worth the banking cost.
Notice the pattern across all three: the split is negotiable; the evidence events are not. A supplier may hold the line at 70% balance and still accept an inspection gate inside those seventy points. That concession costs them little and changes your position completely.
Some structures deserve refusal regardless of relationship. The sharpest red flag: any structure requiring full payment before the goods are stuffed, sealed, and — at minimum — photographed in the container.
The variants wear different costumes: "100% T/T in advance because this is a special-order item"; "full payment before loading because of raw material price volatility"; "balance plus all tooling fees before shipment for custom tooling." Each has a surface logic. Each, if the counterparty turns out to be dishonest or simply collapses, leaves you as an unsecured creditor of a Chinese company chasing goods that were never made, or made and sold to someone else.
At full payment before loading, every protection you have is documentary: the contract, the chop, the invoices. Real, but slow, and priced in litigation. Compare a structure where even 10% of the price is withheld until copy B/L: now the supplier has skin in the game, your demand letter has immediate commercial force, and the calculus of any dispute changes before it starts.
If a supplier genuinely cannot proceed without full prepayment — cash-flow distress, perhaps — that is a fact about the supplier's balance sheet. Which is exactly the kind of fact you want to know before the wire, not after.
The first installment gets less attention than the balance, and it shouldn't. What the contract's Chinese version calls your 30% decides whether it is a penal security or an ordinary advance — in a bilingual contract, the characters 定金 versus 订金 are the difference between a statutory double-return penalty and a refundable prepayment. I cover the mechanics in detail in the article on deposit rules; for present purposes, one sentence: a payment structure is only as strong as its first clause, and the first clause is written in Chinese whether you read Chinese or not.
A final calibration. Milestone design controls when your money moves relative to verifiable facts. It does not control whether the facts themselves are real. An inspection report from an inspection company the supplier selected and paid for is an event — a weak one. A container number on loading photos that no one cross-checks against the B/L is a document, not a verification.
That is why payment structure and counterparty verification are the same exercise viewed from two angles. The structure assumes someone might default and positions your money accordingly; verification asks who you would be defaulting against. A beautifully structured payment plan to a shell company is a slower way to lose the same money.
Before you accept the next proforma invoice's payment terms:
Payment terms are drafted in every PI. They are actually negotiated in maybe one PI in twenty. Being in that twenty is cheap; the alternative is expensive.
This article is general information, not legal advice, and does not create an attorney–client relationship. Outcomes vary by case; nothing here is a guarantee of results.
Send me the PI or draft contract before you sign. I'll mark up the payment clause, the deposit characters, and the evidence events — and tell you where the structure leaves you exposed.
Review my payment terms