What does 30/70 payment mean when buying from a Chinese factory?

30/70 means you pay 30% of the total order value upfront as a deposit when you confirm the purchase order, and the remaining 70% before the goods are loaded onto the ship (before shipment). The 30% deposit confirms the order and covers the factory's material costs. The 70% balance is typically due when the factory sends you a shipping notice and proof that goods are ready to load. Almost no factory ships before receiving the full 70%, so in practice your goods do not move until the balance is paid. 30/70 terms are standard for small-to-medium orders with established factories.

What is a Letter of Credit and do small Amazon sellers need one?

A Letter of Credit (LC) is a bank guarantee: your bank promises to pay the factory when the factory presents documents proving shipment was made according to the LC terms (correct product, quantity, packing, delivery window, port). The bank, not you personally, guarantees payment — so the factory gets bank-backed certainty instead of buyer-trust certainty. LCs reduce risk for both sides in large or unfamiliar transactions. However, LCs cost $500–1,500 to issue, require a bank relationship, and involve strict document compliance (a single discrepancy — wrong date format, mismatched product description — can delay payment and create disputes). For most Amazon sellers under $100,000 per order, the cost and complexity of an LC exceeds the protection it provides. LCs become worth considering when order values exceed $50,000–100,000, when you are working with a new factory on a large first order, or when the factory explicitly requires one as a condition of extending credit terms.

What is the difference between Documents against Payment (DP) and Documents against Acceptance (DA)?

Both are documentary collection methods where shipping documents (the Bill of Lading, which you need to claim your goods at the port) are held by a bank and only released to you when you meet the payment condition. With Documents against Payment (DP or D/P at sight), you pay the full invoice amount when the documents arrive at your bank — you pay, then you get the documents and can claim the goods. With Documents against Acceptance (DA), you sign a time draft (a promise to pay in 30, 60, or 90 days) and receive the documents immediately — you get the goods now and pay later. DA terms extend credit to the buyer; DP terms do not. DA terms carry higher risk for the factory (you could receive the goods and default on the time draft), so they are reserved for buyers with established relationships or verified creditworthiness. Most new factory relationships start with DP or T/T (wire transfer) rather than DA.

When should you push for better payment terms with a factory?

Payment terms are a negotiating lever, not a fixed factory policy. The factors that move terms in your favor: (1) order volume — factories will extend better terms on $80,000 orders than $8,000 orders; (2) relationship length — after 3–5 successful orders with clean payment history, most factories will discuss moving from 30/70 to 30/70 post-shipment or even net-30 after delivery; (3) exclusivity or forward commitment — a letter of intent for a full year of orders gives the factory revenue visibility worth more than the interest on extended terms; (4) factory capacity situation — a factory running at 60% capacity will negotiate terms a factory at 95% will not. The right time to negotiate is when you are placing a repeat order after a successful delivery, not when you are new to the relationship.

Factory Payment Terms for Amazon Private Label: 30/70, LC, DP, and DA Explained

Factory Payment Terms for Amazon Private Label: 30/70, LC, DP, and DA Explained What the payment structures you'll see from Chinese factories actually mean — and which ones protect you, which protect the factory, and when each applies.

What the payment structures you'll see from Chinese factories actually mean — and which ones protect you, which protect the factory, and when each applies.

When you reach the point of placing a purchase order with a factory, the quote will include a payment terms line that most first-time buyers have never formally learned. Terms like "T/T 30/70" or "LC at sight" or "D/P 60 days" encode real commitments about when your money moves, what protections you have if things go wrong, and who bears the risk at each stage of the transaction. This guide covers the core structures you'll encounter and how to think about them.

The Foundation: Wire Transfer (T/T) Terms

T/T stands for Telegraphic Transfer — the standard international bank wire transfer. When a factory quote says "T/T," they mean they want payment via wire transfer (SWIFT or similar). T/T is the method of payment. The fraction that follows specifies the timing.

T/T 30/70 (Most common for new relationships) 30% of the invoice value is wired before production begins (the deposit, confirming the order). The remaining 70% is wired before shipment — when the factory sends a shipping notice with photos of packed goods ready to load. The factory will not release the Bill of Lading or arrange loading until they have received the full 70%. Your goods do not move until you pay.

T/T 100% deposit (Rare; seen for very small or custom orders) Full payment upfront before production begins. Typically requested by factories for small one-off orders under $2,000, highly customized products with significant material cost risk, or first-time buyers with no relationship history. Maximum protection for the factory; maximum risk for you.

T/T 30/70 with 70% after receipt (Established relationships) 30% deposit before production; 70% due within a specified number of days after goods are received and inspected at your warehouse. This is credit extended by the factory. Factories offer this only to buyers they trust, typically after 3–5 successful orders. It significantly improves your cash flow because you have sold some inventory before the full balance is due.

T/T 50/50 (Negotiated for larger orders) 50% at order confirmation; 50% before shipment. Less common than 30/70, but sometimes appears on larger orders ($50,000+) where the factory wants more working capital coverage. Slightly worse for the buyer than 30/70 because more cash is tied up earlier.

Letter of Credit (LC)

A Letter of Credit (LC) is a fundamentally different structure from T/T. It is not just a different payment timing — it is a bank-backed guarantee that changes who is responsible for the payment commitment. How it works: your bank (issuing bank) issues a formal document promising to pay the factory's bank (advising or confirming bank) when the factory presents.

How it works: your bank (issuing bank) issues a formal document promising to pay the factory's bank (advising or confirming bank) when the factory presents shipping documents that conform exactly to the LC terms. The LC specifies: product description, quantity, packing requirements, port of loading, port of discharge, latest shipment date, and required documents (commercial invoice, packing list, Bill of Lading, sometimes certificates of origin or inspection reports).

The factory ships, presents the documents to their bank, the bank verifies compliance, and payment is released — typically within 5 banking days. Your obligation to pay is absolute once a complying presentation is made; you cannot withhold payment because you have a dispute with the factory about product quality (that's a separate legal process).

Types of LC

LC at sight (Sight LC): factory is paid immediately when complying documents are presented. Equivalent to T/T before shipment in cash-flow terms — the factory gets paid at shipment, you pay your bank at that point.
Usance LC (Deferred LC): factory presents documents at shipment but payment is released 30, 60, or 90 days later. The factory has essentially extended credit but with bank-backed certainty. Usance LCs are favorable for buyers because you receive the goods and have time to sell some inventory before full payment is released.
Revolving LC: covers a series of shipments over a period rather than a single transaction. Common for buyers with regular high-volume orders from the same factory.

When does an LC make sense for Amazon sellers?

LCs have a real cost: $500–1,500 to issue, plus bank fees on both sides. They also require strict document compliance — any discrepancy between the LC terms and the presented documents (even minor ones, like a date format or a packing description that doesn't exactly match) creates a "discrepant presentation" that can delay payment and generate dispute fees.

For most Amazon sellers, the practical answer is: an LC makes sense when your order value exceeds $50,000–100,000 with a factory you don't yet have full trust in, or when the factory specifically requires one as a condition of the transaction. Below those order sizes, the LC cost as a percentage of the order value is rarely justified by the protection it provides.

One important LC asymmetry: an LC protects the factory's payment certainty, not your product quality. If the factory ships the wrong product but presents technically complying documents, the bank releases payment. Your recourse for quality failure is a separate legal claim, not the LC. LCs protect against non-payment risk, not quality risk.

Documentary Collections: DP and DA

Documentary collections are a middle ground between pure T/T (where you trust the factory) and LC (where a bank guarantees payment). In a documentary collection, a bank holds the shipping documents — specifically the Bill of Lading — and releases them to you only when you meet a condition.

The Bill of Lading is the title document for your goods. Without it, you cannot claim your shipment at the port. Whoever holds the Bill of Lading controls the goods.

D/P — Documents against Payment (Cash Against Documents) The factory ships the goods and sends the Bill of Lading and other shipping documents to their bank, which forwards them to your bank. Your bank presents the documents to you and says: "Pay the invoice now and we'll release the documents." You pay; you get the Bill of Lading; you can claim your goods. You do not get the documents until you pay. Risk for the factory: if you refuse to pay, they still own goods sitting at a foreign port. Risk for you: minimal, because you don't pay until documents are in hand.

D/A — Documents against Acceptance Same process, but instead of paying immediately, you "accept" a time draft — you sign a formal promise to pay in 30, 60, or 90 days. You receive the documents (and can claim your goods) immediately after signing the acceptance. You have extended credit: goods in hand, payment due later. Risk for the factory: you could receive the goods and fail to pay the time draft (this is a breach of contract but not secured by any collateral). Risk for you: minimal, but the time draft is a legally enforceable obligation.

Term	When you pay	When you get goods	Factory risk	Common context
T/T 30/70	30% now; 70% before shipment	After full payment	Low	Most common; new relationships
LC at sight	At shipment (bank-backed)	After LC complies	Very low	Large orders; unfamiliar buyers
Usance LC	30–90 days after shipment	At shipment	Low (bank-backed)	Large orders with credit extension
D/P (DP)	At document presentation	After payment	Medium (goods at port)	Established relationship; mid-size orders
D/A (DA)	30–90 days after goods received	On acceptance	High	Trusted, long-term relationships
Net-30 after delivery	30 days after warehouse receipt	On delivery	Very high	Multi-year relationships; volume buyers

How Payment Terms Affect Your Cash Flow on Amazon

Most Amazon private-label sellers are capital-constrained. Understanding how payment terms interact with your Amazon cash cycle matters for planning inventory. A simplified example: you place a $20,000 order under T/T 30/70 terms with a standard production and shipping timeline.

Most Amazon private-label sellers are capital-constrained. Understanding how payment terms interact with your Amazon cash cycle matters for planning inventory.

A simplified example: you place a $20,000 order under T/T 30/70 terms with a standard production and shipping timeline.

Day 0: wire $6,000 deposit (30%)
Day 30–45: production complete; wire $14,000 balance (70%)
Day 45–60: goods in transit
Day 60–75: goods arrive at FBA warehouse
Day 75–90: first sales revenue from Amazon (paid 14 days after sale)

Under this timeline, you have $20,000 out of pocket for 60–90 days before any revenue returns. If you can negotiate T/T 30/70 with the 70% due 30 days after delivery, you shift the full $14,000 payment to day 90–105 — after you've started receiving Amazon payouts. That change alone can be the difference between needing a line of credit and not.

Tariff timing intersects with payment terms. Under T/T 30/70 terms, you have paid the full invoice before goods arrive at the US port. But duties are paid at US Customs clearance — after the goods arrive. If tariffs increase between your 70% wire and your customs entry date, you are exposed to the higher rate with no contractual recourse against the factory. The deposit and balance you paid reflect the old price; the US government collects duties at whatever rate applies on the day of entry.

Red Flags in Payment Term Negotiations

A few patterns that signal risk: A new factory asking for 100% upfront : understandable for very small orders or highly customized work, but a request for 100% T/T upfront on a standard $15,000+ order should prompt additional due diligence.

A few patterns that signal risk:

A new factory asking for 100% upfront: understandable for very small orders or highly customized work, but a request for 100% T/T upfront on a standard $15,000+ order should prompt additional due diligence. Verify the factory's business license, export records on ImportYeti, and references before wiring.
Terms that change between quote and invoice: if the factory quoted "T/T 30/70" but the proforma invoice says "T/T 100% before production," ask in writing why the terms changed. Honest factories acknowledge the discrepancy; suspicious ones will have unclear explanations.
An LC with unusual conditions: LCs that include non-standard conditions ("payment conditional on buyer's inspection report") are designed to create disputes. Stick to standard LC terms that your freight forwarder or bank can review.
Pressure to wire outside of business hours for "booking" reasons: legitimate factories operate on normal business cycles. Urgency-based payment pressure before due diligence is complete is a common fraud signal.

Negotiating Better Terms as Your Relationship Grows

Payment terms are a function of trust, and trust is built through transaction history. The practical sequence most private-label buyers move through: Orders 1–2 : T/T 30/70 before shipment. No credit; factory takes no payment risk; you prove you pay on time.

Payment terms are a function of trust, and trust is built through transaction history. The practical sequence most private-label buyers move through:

Orders 1–2: T/T 30/70 before shipment. No credit; factory takes no payment risk; you prove you pay on time.
Orders 3–5: T/T 30/70 with the 70% due within 7 days of Bill of Lading (after goods ship but before arrival). Small step, but you gain 2–3 weeks of float.
Orders 6+: Negotiate net-15 or net-30 after receipt. Frame it around your next order: "If we can move to net-30 terms, we can commit to _____ orders per year." Factory finance managers understand this trade.
High volume: Usance LC or DA terms become available when your volume justifies the factory extending meaningful credit with bank backing or relationship confidence.

The single most important factor in moving along this progression: pay on time, every time. A buyer with 10 clean payment records can negotiate almost any terms a factory of similar size will offer. A buyer who has disputed payments, paid late, or gone silent during a quality issue loses the relationship capital that makes better terms possible.

Understanding payment terms is part of understanding your real landed cost. Terms affect when your cash leaves, how much capital you need to hold in reserve, and what your exposure is if something goes wrong in transit. For supply chain research purposes, the same Bill of Lading data that appears in ImportYeti records the payment terms negotiated between the factory and the importer — which means import data analysis can sometimes reveal what credit terms major brands are getting, and use that as a signal about supplier relationship depth.