The balance payment is your last piece of use. Most sellers give it up before the inspection.

Key takeaways

• The standard structure is a deposit against production and a balance against inspection. The balance is the only use you retain once production has started.
• The rule is treat every transaction as a first transaction until three successful orders, using escrow rather than direct transfer.
• Wire only to an account in the same legal name as the business license. The most common scam is a request to pay a different account, framed as saving platform fees.
• Trade Assurance is covering payment up to an order-level cap where the transaction stays entirely inside the platform. It does not cover you off-platform.
• Letters of credit sit further along the same spectrum. Reporting on Incoterms notes they rule out some terms entirely and work best with the C terms.

Payment structure looks like a finance question. It behaves like a quality-control one. What you have already paid decides what you can still insist on, and most sellers pay the balance before they have seen the goods.

01The standard structure

A deposit against production, a balance against inspection. 30/70 is the arrangement most commonly described, with the deposit funding materials and the balance released once the goods are verified.

The order is the whole point:

1. Deposit
2. Production
3. During-production inspection (on a first run)
4. Pre-shipment inspection
5. Balance payment
6. Shipment

Steps 4 and 5 are frequently reversed, usually because the supplier asks and the seller is inexperienced or in a hurry. Reversing them converts a rework conversation into a refund conversation — with a company in another jurisdiction, after the goods have shipped.

02The escrow rule

The rule is: until you have shipped three successful orders with a supplier, treat every transaction as a first transaction — using escrow rather than a direct transfer.

Escrow mechanisms include Alibaba Trade Assurance, Payoneer Escrow and third-party escrow services, holding payment until shipment and acceptance conditions are met.

After three clean orders, sourcing practitioners describe moving to a letter of credit or a 30/70 telegraphic transfer for speed — but not before.

What Trade Assurance actually covers: payment up to an order-level cap against quality and on-time delivery failures, where the transaction happens entirely within the platform. It does not cover you if you wire to a personal account or move the conversation off-platform.

03The scam that costs the most

— the most common pattern by some distance, and worth repeating from the verification guide:

A request to wire the deposit to a different account — often a “subsidiary” in Hong Kong — framed as saving 3% in platform fees.

The outcome is consistent: the supplier stops replying, or claims a rogue employee stole the funds, and there is no recourse because the transaction left the platform.

The rules that prevent it:

• Wire only to an account in the same legal name as the business license, verified at the source registry
• Never to a personal account
• Never by Western Union, PayPal for goods, or cryptocurrency — all designed for one-way transfers with no buyer protection
• A change of bank details mid-relationship is verified by voice call to a number you already held, never by replying to the email that requested it

That last rule matters because account compromise is a real pattern: hackers gaining access to a legitimate supplier’s account and intercepting ongoing negotiations. The correspondence looks right because it is in the right thread.

04Letters of credit

Further along the spectrum, and worth knowing about even if you never use one.

An L/C is a bank undertaking to pay against documents. It shifts the risk to a documentary question — did the seller present the required papers — rather than a trust question.

One interaction worth knowing: the Incoterms guide covers how letters of credit constrain term choice. EXW is ruled out because the supplier is paid before pickup. F terms require trust because a canceled transit leaves no bill of lading to present. D terms require trust because the seller bears all transport cost. That leaves the four C terms as the best fit with an L/C.

When it makes sense: large orders, new relationships at scale, or where the counterparty requires it. For a marketplace seller at typical order sizes, escrow is usually the proportionate tool and an L/C is bank charges and paperwork for risk that escrow already covers.

05What the payment terms should say in writing

Beyond the split, four things belong in the purchase order:

The inspection condition. Balance payable on a passing inspection report from a named third party, at a specified AQL — see the QC guide.

Rework and re-inspection cost allocation. Who pays when the first inspection fails.

A hold-shipment right. Your ability to stop shipment on a failed inspection, which is meaningless unless it is written.

The remedy. What happens if the goods are unacceptable — rework, replacement, refund, or discount — and on what timeline.

Reporting on agent selection names exactly these — AQL, hold-shipment and remedy clauses — as the contract terms to ask about, and notes that where there is no contract, the question becomes what the equivalent recourse mechanism is.

If the answer is “we trust each other,” you have no recourse mechanism.

06What to do

Never release the balance before the inspection report. Everything else in this guide is secondary.

Use escrow for the first three orders, without exception.

Verify the bank account against the business license before the first wire, and verify any change by voice.

Put the AQL level, hold-shipment right, rework allocation and remedy in the purchase order.

Keep the invoice requirements in view. The payment structure and the invoice are separate documents and both matter — see the supplier invoice, which six separate systems will ask for.

Do not accelerate the sequence because the shipment is late. A late shipment is a cost; a released balance against unverified goods is a loss.

Model it on your own figures. The cash flow planner maps deposit, balance, freight, receiving and payout onto a timeline so you can see the gap between money leaving and money returning. Nothing is stored and nothing leaves your browser.

Look at your last purchase order. Which came first on the calendar: the balance transfer or the inspection report? If it was the transfer, that is the next thing to change, and it costs nothing.

Frequently asked

What payment terms should I use?

A deposit against production and a balance against a passing inspection — 30/70 is the commonly described split. The sequence matters more than the ratio: inspect, then pay the balance, then ship.

When can I stop using escrow?

The rule is treat every transaction as a first transaction until three successful orders have shipped, then consider a letter of credit or a 30/70 telegraphic transfer for speed.

Does Trade Assurance protect me?

Partially. It will cover payment up to an order-level cap against quality and delivery failures where the transaction happens entirely within the platform. It does not cover you if you wire off-platform or to a personal account.

My supplier wants payment to a different account to save fees. Should I?

No. It is the most common scam pattern, and the outcome is that the supplier stops replying or claims a rogue employee. Wire only to an account in the same legal name as the business license.

Do I need a letter of credit?

Usually not at marketplace order sizes — escrow covers the same risk with less paperwork. Where you do use one, note that it constrains your Incoterm choice, with the four C terms being the best fit.

What should the purchase order say?

The AQL level and inspection condition on the balance payment, who pays for rework and re-inspection, your right to hold shipment on a failed inspection, and the remedy if goods are unacceptable.

Sources

1. Alibaba.com Trade Assurance: order protection terms (coverage of payment against product quality and on-time shipment for orders placed and paid through the platform; not applicable to off-platform payments), Alibaba.com, Trade Assurance help center accessed 2026-09-04
2. How to avoid getting scammed importing from China (treating every transaction as a first transaction until three successful orders; escrow through Trade Assurance, Payoneer Escrow or third-party escrow; moving to L/C or TT 30/70 afterwards; Trade Assurance covering payment only within the platform), ChineseCheck Secondary accessed 2026-09-04
3. How to verify a Chinese supplier (2026) (wire only to an account in the same legal name as the business license; never Western Union, PayPal for goods or cryptocurrency; third-party inspection before paying the balance on orders over a threshold), China With Me Secondary accessed 2026-09-04
4. Alibaba supplier scam: 5 warning signs importers miss (the off-platform wire request framed as saving platform fees; account compromise and intercepted negotiations), VeriSupplier Secondary accessed 2026-09-04
5. Incoterms 2026: meaning, chart and list (letters of credit ruling out EXW, requiring trust under F and D terms, and leaving the four C terms as the best fit), Freightos Secondary accessed 2026-09-04
6. China sourcing in 2026 (AQL, hold-shipment and remedy clauses as the contract terms to ask about, and the equivalent recourse question where no contract exists), FF Order Secondary accessed 2026-09-04
7. QC inspection in China (sampling the finished batch so the buyer can verify before releasing the balance payment), Stellar Chinese Secondary accessed 2026-09-04