Standard deposit and balance structure
A common structure is a 30% deposit on order confirmation and 70% balance before shipment — paying the full amount upfront removes any leverage to hold a factory accountable if the order doesn't match what was agreed.
Which payment methods offer more protection
Letters of credit and trade assurance platforms offer more built-in protection than a direct bank transfer, though they add cost and complexity — worth weighing against order size, since the added protection matters more on larger orders than small ones.
Verifying the payment destination matches the contract
Payment should go to a business bank account matching the name on your contract and the factory's business licence — a request to pay a personal account or a different company name is one of the clearest fraud warning signs and should stop the process until resolved.
When the deposit should actually be paid
A deposit is not what reserves production capacity — the signed purchase order and the approved sample are. Paying against a quote, before the specification is confirmed and a sample approved, gives away your main point of leverage in exchange for nothing concrete, and leaves the price open to revision once the specification firms up.
The sequence that protects both sides is: specification agreed, sample approved in writing, purchase order signed, then deposit paid. The deposit then secures a production slot against a fixed specification, and there is a clear baseline to compare the finished goods against on inspection day.
Bank charges and who carries the currency risk
International transfers attract charges at both ends, and it is worth agreeing in the contract who pays them. If the receiving bank deducts its fee, the factory may receive less than the invoiced amount — which is how a short-payment dispute begins on an order that was settled in full from your side of the transaction.
Currency movement is the other quiet exposure. A quotation in US dollars against a factory that costs out in renminbi carries exchange risk across a production cycle that can run several months. Either agree a rate with a defined validity period, or establish which party absorbs the movement if the schedule slips.
Keeping records that would support a claim
When an order goes wrong, the difference between a resolution and a loss is usually documentation. Keep the signed purchase order and specification, the written sample approval, the agreed inspection standard, the inspection reports themselves, and the full payment trail with bank references.
This matters more with an overseas supplier than a domestic one, because enforcement across borders is slow and expensive. A well-documented claim that the factory believes it would lose is often settled commercially; an undocumented one usually is not.