How Does T/T 30/70 Work Before Your Bag Shipment?

Telegraphic transfer is the default way a bag order is paid, and 30/70 is the default split. Both are so standard that buyers rarely read the clause carefully, which is odd, because the clause is where the whole commercial risk of the programme sits. A deposit is a payment made before anything has been built, and the protection for it is not the instrument. It is the specification, the schedule and the documents attached to the balance. This piece sets out what each payment does, what should sit beside it, and the five details that decide whether the arrangement works.

What Does T/T 30/70 Actually Mean?

Two bank transfers, split thirty and seventy, against two defined moments. The transfer itself is an instruction from the buyer bank to move funds to a named beneficiary, settled through correspondent banks; the mechanics and the standards behind cross-border payment messaging are maintained by the industry rather than by either party, and the practical consequence for a buyer is that a transfer takes time, can be intercepted on the way, and cannot be recalled once it has landed.

The split is not arbitrary. Thirty percent covers the material the desk has to buy forward and the production capacity it has to reserve, and it is deliberately less than the value of the work completed at that point, so that the buyer is never paying in advance for value that does not yet exist. Seventy percent falls due when the goods are finished and released, which is the point at which the buyer has something to inspect and something to withhold.

What Does the 30% Deposit Actually Release?

Two things, and both are worth naming in the confirmation. The first is the material booking: fabric, foam, hardware and trim have to be bought forward because a run cannot wait for a purchase order to become a purchase. The second is a slot in the production calendar, which on this programme is 35-50 days of line time counted from written sample approval.

What the deposit does not release is worth stating just as clearly. It does not buy the right to change the specification, because a change after material is bought has a real cost that somebody has to carry. It does not fix the price against material movement beyond the quoted validity, and it does not transfer risk of any kind: the goods are not the buyer property until the Incoterm says they are, which under FOB Xiamen is when they are loaded.

When Is the 70% Balance Due?

At a defined document event, and the event has to be written down. The usual choices are release after a passed final random inspection, release against a copy of the bill of lading, or release before loading. Each allocates risk differently: release after inspection gives the buyer the strongest position, release against a bill of lading gives the seller certainty that the goods have left, and release before loading gives the buyer the least protection of the three.

Where the buyer has a third-party inspection booked, tie the balance to the inspection result rather than to a date. "Balance due on a pass at AQL 2.5 under ISO 2859-1 at General Inspection Level II, or on an agreed remediation" is a clause that can be administered. "Balance due before shipment" is a clause that will be argued about on the day the vessel is closing.

What Documents Accompany Each Payment?

The deposit should be accompanied by a proforma invoice that restates the specification, the quantity, the price, the Incoterm with its edition, the windows and the payment split. It is a commercial document rather than a tax document, and its job is to make the order confirmable. The balance should be accompanied by a commercial invoice, a packing list, the inspection report, and the transport document named by the Incoterm.

The distinction between the two invoices matters more than buyers expect. A proforma invoice is an offer to sell on stated terms; a commercial invoice is the document used for the customs entry and for payment of duty in the destination market. The values on the two should agree, and where they do not, the customs entry is where the discrepancy surfaces. That is a buyer problem rather than a seller problem, which is why the commercial invoice should be checked before it is used.

How Does a Bank Transfer Actually Move?

The buyer instructs their bank, the bank sends a payment message, and the funds settle through one or more correspondent banks before landing in the beneficiary account. Each step has a cut-off time and a value date, and each intermediary can apply a charge. The standards for the messaging are maintained by the industry body for interbank communication, and the settlement arrangements are overseen at the level of the payment systems themselves.

Three practical consequences follow. A transfer initiated late in the day or before a weekend does not start moving until the next banking day. A transfer can take longer than a buyer expects and still be entirely normal. And the charge treatment has to be agreed: whether the sender pays all charges or the beneficiary receives a net amount determines whether the full invoiced sum arrives, and a shortfall is enough to hold a release.

What Can Go Wrong With Bank Details?

One thing, and it is serious: an intercepted instruction that changes the beneficiary. The pattern is an email from a legitimate-looking address, close to the date a payment is expected, advising a change of account. It is effective precisely because it arrives at the moment a payment is genuinely due. The defence is procedural rather than technical: never accept a change of bank details by email, and verify any change by a second channel with a person already known to the buyer.

A second, smaller risk is the shortfall. Where charges are deducted along the way and the beneficiary receives less than invoiced, a release can be held for a difference that is trivial in money and expensive in time. Agreeing the charge treatment up front removes it. Confirming the beneficiary name, the account and the bank on the proforma invoice, and checking that the name on the account matches the name on the invoice, removes most of the rest.

How Are Quantity and Price Adjustments Handled?

Three adjustments arise in most programmes, and each needs a rule written before it happens. The first is the quantity tolerance: production rarely lands exactly on the ordered number, so the confirmation should state the permitted variation and how the difference is invoiced. The second is a change order, where the buyer alters something after confirmation; that is priced separately and agreed in writing rather than absorbed. The third is a packing change, which alters carton cube and therefore freight.

The principle behind all three is that the balance follows the final documents rather than the original figures. Where the delivered quantity is within the stated tolerance, the commercial invoice is raised on the delivered figure and the balance is calculated from it. Where a change order has been agreed, it is invoiced as a separate line rather than folded into the unit price, because a folded figure makes the next reorder impossible to compare.

How Do You Write Payment Terms Into the Order?

Split

30% on confirmation, 70% at the defined document event

Beneficiary

Account name, number, bank and branch, verified on the proforma invoice

Currency

The currency the price is stated in, and who bears movement

Charges

Whether the sender pays all charges or the beneficiary receives a net sum

Document event

What triggers the balance, named precisely

Inspection tie

Whether the balance is conditional on a pass, and at what standard

Late payment

What happens to the schedule when the balance is late

Bank detail changes

That changes are never accepted by email alone

What Happens if Payment Is Late?

The schedule moves, and it moves by more than the number of days the payment was late. Production slots are planned in advance; a run that does not start on its planned day loses that day and the line moves to the next job. The practical effect is that a balance paid five days late can push a completion date by more than five days, particularly near a holiday period or a peak season.

This is worth writing into the clause rather than discovering. A confirmation that says the completion date is calculated from written sample approval and from receipt of the balance, whichever is later, is honest and it protects both sides. It also gives the buyer a reason to care about internal approval cycles, which is where most late payments originate.

How Does T/T Interact With the Incoterm?

The payment term and the delivery term are separate and should be read together. T/T 30/70 says when money moves; the Incoterm says where cost and risk transfer. Under FOB Xiamen the buyer bears cost and risk from the point the goods are loaded at that port, and the balance is normally due before or at that point. Under a delivered rule the seller carries the goods further, and the natural document event for the balance moves accordingly.

Where CIF or DDP is chosen instead, the balance event should be restated, because a clause written for FOB and used under a delivered rule will allocate risk in a way neither party intended. Naming the edition matters here too: the current set published by the International Chamber of Commerce is Incoterms 2020, and a clause that names no edition leaves the transfer point to be argued.

What Does the Deposit Mean for the Relationship?

More than buyers assume. A deposit is the first point at which both parties have something at stake, and how it is handled sets the tone for the rest of the programme. A deposit sent promptly against a signed-off specification tells the desk that the buyer is organised, and organised buyers get told about problems earlier. A deposit held while the buyer finishes deciding tells the desk that the schedule is soft, and soft schedules are the ones that get moved when capacity is tight.

The reciprocal point is worth stating: a desk that asks for a deposit before the specification is settled is asking the buyer to fund ambiguity. The honest order is specification, then quotation, then sample approval, then deposit, then bulk. Where a programme has to run faster than that, the shortcut that works is a parallel material booking rather than an early deposit, because a material booking can be released against a specification that is nearly settled without committing the buyer to a build.

What Should the Buyer Confirm Before Sending Money?

Six things, in one pass: the beneficiary name matches the invoicing entity, the account details match the proforma invoice, the amount matches the agreed split, the currency matches the quotation, the charge treatment is agreed, and the document event for the balance is written down. Six checks take five minutes and they are the whole of the buyer protection at the deposit stage, because after the money lands the only remaining lever is the relationship.

The seventh check is the one that protects the programme rather than the payment: that the specification is signed off and the reference sample is agreed before the deposit is sent. A deposit sent against an unsettled specification buys a slot in a calendar for a bag nobody has agreed, and the correction later costs more than the delay would have.

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