Payment terms define how funds move between buyer and supplier at each stage — deposit on PO, method used, and the trigger that releases the balance. The wrong arrangement — 100% upfront to an unverified supplier — is how most commodity import losses happen.
TT is the default in commodity ingredient trade. LC adds bank-enforced documentary control. Escrow sits between them for small or platform orders. Each has a clear use case — and a misuse.
01
Default — with conditions
Telegraphic Transfer (TT)
Direct bank-to-bank wire. Fast, cheap, universal — and the structure most open to abuse if you do not impose milestone discipline.
30–50% on PO · 50–70% on COA / inspection / B/L
100% upfront before any production doc: reject
02
Bank-secured, larger first orders
Letter of Credit (LC)
Your bank guarantees payment once a defined document set (B/L, invoice, packing list, COA, COO, phytosanitary) complies exactly. Above ~USD 25k–50k with an unverified supplier it shifts significant risk.
Issuance + negotiation + confirmation fees
Typo in shipper address = discrepancy = delay
03
Small orders & platforms
Escrow / Trade Assurance
Platform (Alibaba Trade Assurance etc.) holds funds and releases on buyer confirmation. Better than direct TT to a new contact; less robust than a bank LC. Good for 25–100 kg trials.
Covers non-shipment, weak on nuance
Specify assay disputes require lab doc, not platform form
Important: payment, banking and import rules vary by country, bank and transaction. Confirm specifics with your commercial bank, trade-finance team and legal counsel before committing funds.
T/T — detail
Telegraphic transfer: structure the milestones
The balance trigger is everything. Want the lot COA — run on the production batch you are buying, not a historical reference — to confirm moisture below 7.5–8%, Salmonella absent in 25 g, heavy metals within target, and protein consistent with your order. Only then release the balance.
For FCL or pallet orders above your risk tolerance, require third-party inspection (SGS, Bureau Veritas, Intertek — typically a few hundred USD) as the balance trigger rather than the supplier’s own COA alone. This removes the fox-guarding-the-henhouse problem.
Deposit 30–50% on PO — secures slot & raw material
Balance on COA passing your review, or inspection sign-off, or B/L presentation
New supplier at 50% deposit on first order: normal · 100% upfront with no docs: not normal
Always: lot COA + method + lab + accreditation line
LC — detail
Letter of credit: bank-enforced documentary control
An LC means the supplier cannot draw funds until the document set complies. Include the COA as a named document in the LC — this forces it into the bank-controlled record rather than a courtesy email attachment.
Agree LC terms + document list + latest shipment date in the contract
Buyer instructs issuing bank → SWIFT MT700 → advising/confirming bank
Supplier presents within presentation period (often 21 days from B/L)
Bank checks compliance; if clean, pays. Typo = discrepancy.
Fees: issuance, negotiation, confirmation; lead time to set up
Escrow — detail
Escrow & trade assurance: for trials
For 25–100 kg trial lots sampled through a B2B marketplace, platform trade assurance is a practical baseline layer. It covers non-shipment and major departure from description. It is less reliable for nuanced spec disputes — e.g. protein 22% vs contracted 24% — which need a written spec + pre-shipment inspection, not a platform dispute form.
Funds held with third party, released on buyer confirmation or after dispute window
Not as robust as a bank LC · outcomes vary
Good for sampling before scaling to direct contract
Milestone map
Deposit → balance: what releases what
Every moringa order should tie payment releases to physical deliverables, not to calendar dates.
B/L copy → balance released if that is the trigger
Stronger variant
Documents released to buyer to clear customs; escrow released after receipt confirmation
A new supplier asking for 50% upfront on a first order is within normal range. Asking for 100% upfront before any production documentation exists is not — walk away.
Buyer protection
Practices that sit on top of any method
The method is one layer. These practices are the second layer — and they apply whether you pay by TT, LC or escrow.
Deposit → PO confirmed. Balance → COA/inspection/B-L — not “30 days after invoice”.
Note
Write triggers into the contract verbatim.
The analysis run on the batch you are buying, with test method and accreditation body — not a scanned “Absent” line.
Note
Salmonella absent in 25 g is a lab result, never an assurance.
Independent pre-shipment inspection before balance release removes self-certification risk. Standard for FCL/pallet.
Note
Agree inspection body and scope at PO stage.
Payment-redirection fraud — a spoof invoice swaps the beneficiary account — is common in commodity trade.
Note
Confirm any account change by phone/video with a known contact, before wiring.
India imposes a 0.1% TCS (tax collected at source) on certain export proceeds; Indonesian export taxation is different. Check current treatment with your tax adviser — do not assume parity.
Fraud prevention
Out-of-band verification
The most expensive email in moringa trade is a perfectly formatted “updated bank details” message from a spoofed address. The fix is procedural: every account detail — including any change — is verified by a voice/video call to a previously validated number, before any wire is sent. No exception.
Treat any mid-transaction bank-detail change as hostile until proven otherwise
Keep a single validated beneficiary record on file
LC reduces redirection risk because the bank, not an invoice, controls the payee
Yes — 30–50% deposit on PO is the common TT structure, and 50% on a first order with a new supplier is within normal range. What is not normal is 100% upfront before any production documentation exists. That is a rejection signal. Structure the balance to release only after a lot-specific COA (with method and lab) — or a third-party inspection sign-off — has passed your review.
When the first-order value is material — roughly above USD 25k–50k — or the supplier is unverified, an LC shifts significant risk. The bank enforces documentary conditions (B/L, invoice, packing list, COA, COO, phytosanitary). The supplier cannot draw funds until the set complies exactly. The trade-off is cost (issuance, negotiation, confirmation) and lead time, plus the need for documentary precision. Include the COA as a named document in the LC so it becomes part of the bank-controlled record.
For 25–100 kg trial lots it is a practical baseline — better than a direct TT to a new contact. It covers non-shipment and major departure from description. It is less reliable for nuanced spec disputes (e.g. protein 22% vs contracted 24%, or a colour claim), which need a clear written spec and pre-shipment inspection documentation rather than a platform dispute form. Treat it as a sampling bridge before scaling to a direct contract.
Verify every beneficiary account — and every “account has changed” notice — out-of-band: a voice or video call to a previously validated number, before any wire. Do not confirm bank details by replying to the same email thread that delivered them. Keep a single validated beneficiary record on file and treat any mid-transaction change as hostile until independently confirmed. LCs reduce this risk because the bank controls the payee, not the invoice.
Related guides
The rest of the commercial picture
Terms are one commercial lever — price, MOQ, lead time, freight and FOB sit alongside them.
Send your lot size, origin shortlist, preferred method and document requirements. We come back with a milestone structure that ties every wire to a deliverable.
