The minutes before you wire a deposit are the riskiest part of any China sourcing transaction. Up to that point, you hold the leverage — the supplier wants the order. Once the money lands in their account, that balance shifts hard in their favor. Recovering funds across borders is slow, costly, and for amounts under roughly $10,000 it's often not worth the legal effort. So the verification you do beforehand isn't a formality. It's the most valuable work in the whole process.
This guide walks through what to confirm before you pay, how to read a proforma invoice like a contract, which payment terms tend to protect a buyer, and the signals that should make you pause a transfer entirely.
What to Verify Before Sending Any Money
At a minimum, I'd want these five things confirmed before a deposit goes out. None of them are expensive to check, and skipping any one of them is where most preventable losses start.
| Verification Item | How to Confirm | What You Risk If You Skip It |
|---|---|---|
| Company identity | Cross-check the business license against gsxt.gov.cn | Paying a shell entity or a company that doesn't exist as described |
| Bank account match | Beneficiary name on the PI matches the business license exactly | Money routed to an unrelated third party |
| Proforma invoice accuracy | Specs, prices, and terms documented and mutually agreed | Disputes over scope, quality, or price you can't easily win |
| Sample approval | Pre-production sample reviewed and accepted in writing | Quality gaps discovered only after the full run is made |
| Payment terms clarity | Written agreement on deposit %, milestones, and balance | One-sided changes to the payment structure later |
Treat these as the floor, not the ceiling. A supplier who pushes back on any of them is telling you something useful — listen to it before your deposit leaves.
Reading a Proforma Invoice
A proforma invoice (PI) from a Chinese supplier reads like a price quote, but it functions as the commercial spine of your order. It's usually your strongest piece of written evidence if things go sideways, so read it the way you'd read a contract — slowly, and looking for what's missing.
What a complete proforma invoice should carry:
| Element | What to Check |
|---|---|
| Supplier company name | Matches the business license, character for character |
| Supplier address | Matches the registered address on the license |
| Supplier bank details | Beneficiary name matches the company name |
| Your company name and address | Correct, complete, spelled properly |
| Product description | Specific — grade, dimensions, finish — not "silicone parts" |
| Quantity and unit price | Broken out per SKU |
| Payment terms | Deposit %, milestone %, balance %, and due points |
| Delivery terms | Incoterm (FOB, CIF, EXW), named port, estimated date |
| PI number and date | A unique reference for this transaction |
| Validity period | How long the quoted prices hold |
Signals worth a second look:
- Vague specs — "per sample" with no sample reference number attached
- Bank details naming a different company, or worse, a personal account
- Payment terms that quietly differ from what you discussed over email or call
- No PI number or date, which often points to a document thrown together at the last minute
- Sloppy formatting or errors that don't match a supplier's claimed scale
A proforma invoice isn't a binding contract in most jurisdictions, and I wouldn't treat it as one. But when a dispute comes, the PI is the document everyone returns to. The more precise it is now, the less room there is to argue later.
The Bank Account Name Should Match the License
This one is simple enough to state plainly: the beneficiary name on the receiving account should match the company name on the business license. When it doesn't, you're being asked to send money to an entity you haven't checked.
A few common scenarios and how I'd handle each:
- A different company name. Ask why. There can be legitimate reasons — a trading arm, a separate export entity — but you want the relationship documented through shareholding or registration records before you accept it, not just explained over chat.
- A personal name. I'd stop here. Paying an individual instead of the registered company tends to signal tax avoidance, an unregistered operation, or fraud. None of those are problems you want to inherit.
- A Hong Kong company. This is genuinely common — many mainland suppliers route foreign payments through a Hong Kong entity. It isn't a red flag by itself, but the link between the HK company and the mainland factory should be provable. Check the HK Companies Registry (icris.cr.gov.hk) for shared shareholders or directors.
A workable sequence:
- Compare the account name on the PI to the business license.
- If they differ, ask for the registration document that shows the connection.
- Verify any Hong Kong entity independently through the HK registry rather than taking the supplier's word.
- If the explanation is muddled, keeps shifting, or the supplier gets evasive, hold the payment.
The point isn't to assume bad faith. It's that once funds move to the wrong account, your options narrow fast — so the question gets asked before, not after.
Payment Terms: What's Typical, What's Worth a Pause
First-order payment terms from China tend to follow a few recognizable patterns. Knowing the usual shapes makes the unusual ones easier to spot. The figures below are planning estimates — they shift with product type, order value, and how long you've worked together — not fixed rules.
| Payment Structure | Often Seen With | Buyer Risk Profile |
|---|---|---|
| 30% deposit / 70% before shipment | First orders, newer relationships | Moderate |
| 30% deposit / 70% against B/L copy | Established suppliers | Lower–moderate |
| 50% deposit / 50% before shipment | Custom products carrying tooling | Higher |
| 100% upfront | Rarely worth accepting on a first order | Very high |
| Letter of credit (L/C) | Larger orders, suppliers you know | Lower |
| 30% / 30% after sample / 40% before shipment | Tooling-heavy runs | Moderate |
What's worth negotiating for:
- Keep the opening deposit as low as the supplier will reasonably accept. 30% is a common landing point.
- Tie later payments to milestones you can actually verify — sample sign-off, production completion, a passed inspection.
- Aim to make the balance payable only once you have evidence the goods exist and match spec.
- For tooling, settle ownership in writing before the mold deposit goes out, not after.
Signals that should make you pause a transfer:
- A demand for 100% upfront on a first order
- Terms that change after you'd already agreed — especially a change that arrives the day payment is due
- A request to send funds to an account different from the one previously provided
- Pressure dressed up as urgency: a "limited-time" discount or a production slot that's about to vanish
Any one of these deserves a slow conversation rather than a fast wire.
Tooling Ownership: Settle It Before the Mold Deposit
When an order involves tooling — molds, dies, jigs — the tooling deposit is often the single largest payment you'll make. Before it goes out, get ownership in writing.
Questions worth resolving up front:
- Who owns the mold once the tooling fee is paid? (You'll generally want that to be you.)
- If you own it, can you physically remove it and move it to another factory?
- Is there a separate storage or maintenance charge attached?
- What's the expected mold life, in shots or cycles?
- What happens to the mold if you stop placing orders?
Put the answers in the agreement. A supplier who stays vague on tooling ownership may be planning to run your mold for other buyers, or to keep it as leverage if you ever try to move production. Neither is something you want to discover after the deposit clears.
Sample Approval Before Production
The sample stage is your last clean look at the product before a full run gets committed. It's worth slowing down for.
How the sequence usually works:
- Initial sample. Shows the supplier can make something close to what you want. Useful for choosing a supplier — not a basis for approving production.
- Pre-production sample (PP sample). Made with production tooling, production materials, and the actual production process. This is the one that counts. Approve it in writing before you authorize the full run.
What to check on the PP sample:
- Dimensions sit within the tolerances you agreed
- Material is the grade you specified — ask for material certification if it's critical to the application
- Finish, color, and feel match what you signed off on
- It functions the way it's supposed to
- Packaging meets your spec, not just a generic box
A signal worth catching: a supplier who wants to skip the PP sample and jump straight to production "to save time." Occasionally that's genuine scheduling pressure. Often it means they suspect the production run won't match the initial sample, and they'd rather you not see the difference until the order is already made.
Stop-and-Check List Before You Wire
Before authorizing the transfer, I'd run through this:
- Business license verified and showing as active
- Bank account beneficiary name matches the business license exactly
- Proforma invoice reviewed, details confirmed accurate
- Product specs documented with measurable criteria
- Payment terms agreed in writing — deposit %, milestones, balance
- Tooling ownership confirmed in writing (if applicable)
- Pre-production sample approved
- No last-minute changes to payment terms or bank details
- Supplier contact person and a backup contact documented
- Purchase order or contract signed by both sides
If a box is unticked, resolve it before the money moves. The deposit will still be there in two days. The chance to verify won't be.
Deposit Decision Framework
| Situation | Decision | What to Do |
|---|---|---|
| Business license verified; bank account matches; PI is complete and accurate; PP sample approved | PROCEED | Wire the deposit; keep records of all verification documents |
| Business license verified but bank account name differs slightly; supplier provides plausible explanation | PAUSE | Verify the connection between entities before paying; ask for shareholding documentation |
| One of: license unverified, bank account mismatch with no explanation, supplier resists PP sample | PAUSE | Resolve the specific issue before paying; do not accept urgency as a reason to skip |
| Bank account is personal or unrelated company; supplier refuses video walkthrough; PI has no specifications | STOP | Do not pay; the pattern is too risky; seek another supplier |
Last-Minute Payment Changes: A Strong Warning Signal
A supplier who changes payment terms, bank details, or delivery dates at the last minute — after you have agreed on terms — is displaying one of the strongest red flags in China sourcing.
Common last-minute changes include:
- "Our company bank account is under audit — please pay to this other account instead."
- "The shipping cost has increased — please add $X to the deposit."
- "Raw material prices went up — the unit price is now higher."
- "We need to start production this week — please send payment today or lose the slot."
These changes may be genuine — costs do change. But they are also a classic pattern in advance-fee fraud and bait-and-switch pricing. When a last-minute change arrives:
- Do not pay under time pressure. A legitimate supplier will honor the agreed terms or negotiate calmly.
- If the bank account changes, re-verify the new account against the business license.
- If the price changes, ask for documentation — a supplier invoice for raw materials, a freight forwarder quote.
- If you are uncomfortable, pause. No order is so urgent that verification can be skipped.
A supplier who has been transparent through the verification process is unlikely to change terms at the last minute without explanation. A supplier who has been evasive and then demands a last-minute change is following a known pattern.
Related /verify/ Pages
- How to Verify a Chinese Supplier — The full verification workflow before any payment
- China Factory Audit Checklist — What to inspect during an on-site factory audit
FAQ
What should I check before paying a deposit to a Chinese supplier?
Verify the business license, confirm the bank account name matches the company name, review the proforma invoice for accuracy, approve a pre-production sample, and get the payment terms in writing. These five checks are a reasonable minimum before any deposit leaves your account.
Should I verify the bank account before wiring a deposit?
It's one of the most worthwhile checks you can do. The beneficiary name should match the company name on the business license, and a mismatch is among the stronger warning signs in China sourcing. If the names don't line up, your payment may be headed to an entity you haven't actually verified.
Is 30/70 payment normal for first orders from China?
A 30% deposit with 70% before shipment is the most common structure for first orders with newer suppliers, though it varies by product and value. For larger orders or established relationships, paying the balance against a bill of lading copy tends to give the buyer more protection.
What should be on a proforma invoice from a Chinese supplier?
At a minimum: supplier name and address matching the business license, bank details with a matching beneficiary name, specific product descriptions, quantity, unit price, payment terms, delivery terms with Incoterm and port, and a unique PI number and date. The more precise the specs, the less there is to dispute later.
Who owns the mold after I pay the tooling deposit?
You'll generally want ownership to sit with you, but that should be confirmed in writing before the mold deposit goes out — including the right to remove the mold and move it to another factory. A supplier unwilling to agree to that in writing is worth a harder look before you pay the tooling fee.
What if the production sample quality is worse than the initial sample?
Hold off on approving production. The pre-production sample is meant to represent what the full run will deliver, so if it's worse, the supplier needs to explain why and correct it first. Approving anyway and hoping the run improves isn't a plan — it's a gamble with your order on the table.
What red flags should stop me from paying?
A bank account name that doesn't match the license, refusal to share a business license, last-minute changes to terms or bank details, pressure to pay fast, a demand for 100% upfront, and resistance to a pre-production sample. Any one of these deserves scrutiny; two or more together is a strong signal to pause.
Should I use a letter of credit with a new Chinese supplier?
A letter of credit adds protection but also adds cost and paperwork, so it tends to make more sense on larger orders — say, above $50,000. For smaller first orders, a sound deposit-to-balance structure plus independent verification often does more practical good. Keep in mind many small and mid-sized suppliers aren't fluent in L/C requirements, which can slow things down.
What if the supplier asks me to pay to a different company or personal account?
Pause and ask for documentation proving the connection between the entities — registration records showing common shareholders or directors. If the supplier can't produce verifiable evidence, it's reasonable to treat that as a serious problem and look elsewhere.
What is the safest payment structure for a first order from China?
A common lower-risk approach is a 30% deposit by wire with the balance due after a third-party inspection confirms the goods exist and meet spec. Steer clear of 100% upfront, avoid paying personal accounts, and be cautious with suppliers who resist a pre-production sample. No structure removes risk entirely, but this one keeps your leverage intact longer.
Disclaimer: This guide reflects common practices in international trade with Chinese suppliers as of 2026. It is not legal advice, financial advice, or a guarantee of transaction safety. Payment terms, banking rules, and supplier practices vary widely. Conduct your own due diligence in proportion to your order value and risk tolerance, and consult a trade lawyer or financial advisor for guidance specific to your transaction.