Money and Paperwork: Getting Both Right
You've found the right Chinese pump supplier, negotiated a great price, and your customers are waiting. Now comes the part that trips up most first-time importers: payment terms and documentation. Get either wrong, and your shipment sits at the port while demurrage charges pile up.
This FAQ from NOVAPUMP (novapump.cn) covers everything from T/T transfers to Letters of Credit to the paperwork that gets your container through customs.
Payment Terms
Q1: What payment terms are standard for Chinese pump suppliers?
| Payment Term | Risk Level (Buyer) | Typical For |
|---|---|---|
| 100% T/T in advance | High — you have no leverage if goods are defective | Small orders (<$2,000), samples |
| 30% T/T deposit + 70% against B/L copy | Medium — standard for most orders | $2,000-50,000, new relationships |
| 30% T/T + 70% at 30-60 days after B/L | Low-Medium | Established relationships (>1 year) |
| L/C at sight (irrevocable) | Low — bank guarantees payment if docs match | $20,000+, first orders, high-value contracts |
| L/C 60-90 days | Very low — you sell goods before paying | Large contracts, long-standing relationships |
| Open account (OA 30-60 days) | Lowest — but supplier carries all risk | Only for strategic partners (rare) |
Q2: What's a Letter of Credit (L/C) and should I use one?
A: An L/C is a bank guarantee: your bank promises to pay the supplier once they present documents proving the goods were shipped as ordered. Advantages: eliminates payment risk (bank pays, not you directly), supplier knows payment is guaranteed, and banks verify documentation. Disadvantages: costs $200-500 in bank fees, requires precise documentation (one typo = payment delayed), and some Chinese suppliers prefer T/T for speed. Recommendation: use L/C at sight for first orders above $20,000.
Q3: How do I protect myself from fraud?
- Never pay to a personal bank account — only to the company's registered business account. The account name must match the company on the proforma invoice.
- Verify the company exists: Check their business license on China's National Enterprise Credit Information Publicity System (http://www.gsxt.gov.cn).
- Use a third-party inspection service (SGS, Bureau Veritas) for pre-shipment inspection before releasing the 70% balance payment.
- Start small: Place a $1,000-5,000 trial order before committing to a container.
- Visit the factory or hire a sourcing agent to visit on your behalf. A $500 agent visit can prevent a $25,000 fraud loss.
Import Documentation
Q4: What documents should I receive from the supplier before the container arrives?
- Commercial Invoice — Shows product description, quantity, unit price, total value, Incoterm, payment terms. Must match the proforma invoice and packing list exactly.
- Packing List — Carton-by-carton breakdown: dimensions, gross/net weight, contents. Critical for customs inspection.
- Bill of Lading (B/L) — Ocean carrier's receipt for the goods. Three original copies typically issued. You need at least one original to claim the container.
- Certificate of Origin — Proves the goods were manufactured in China. Required for preferential duty rates under trade agreements (Form E for ASEAN, Form A for GSP countries).
- Product certifications — CE, SASO, INMETRO, SONCAP, etc. as required by your country.
- Insurance Certificate — Under CIF/CIP terms, the supplier provides this. Under FOB, you arrange your own.
- Packing declaration — For ISPM 15 compliance (wood packaging treatment). Required if crates/pallets are wooden.
Q5: What's the most common documentation mistake?
A: Discrepancy between documents. The commercial invoice, packing list, B/L, and certificate of origin must all show consistent information: same shipper name, same consignee, same product description, same total quantity. Customs officers are trained to spot discrepancies — and they use them as grounds for inspection, delay, or rejection of preferential duty claims.
Q6: How do Incoterms affect documentation and payment?
| Incoterm | Who Arranges Shipping | Who Provides Insurance Doc | Risk Transfer Point |
|---|---|---|---|
| EXW (Ex Works) | Buyer arranges everything | Buyer | Factory gate |
| FOB (Free On Board) | Buyer arranges ocean freight | Buyer | Loaded on vessel in China |
| CIF (Cost, Insurance, Freight) | Seller arranges to destination port | Seller (minimum 110% invoice value) | Loaded on vessel in China (buyer's risk from that point despite seller paying freight) |
| DAP (Delivered at Place) | Seller arranges to named destination | Seller | Goods available at destination (before unloading) |
Customs Clearance
Q7: What additional documents does my country's customs require?
| Country | Additional Required Documents |
|---|---|
| Nigeria | SONCAP Certificate, Form M (opened before shipment), PAAR (Pre-Arrival Assessment Report) |
| Kenya | KEBS PVoC Certificate, IDF (Import Declaration Form) |
| Saudi Arabia | SASO CoC, SABER platform registration |
| Brazil | INMETRO certificate, RADAR license (importer registration), DI (Import Declaration) |
| Thailand | Form E (ASEAN-China FTA), import license for certain pump types |
Q8: How do I handle customs valuation?
A: Never under-declare the value to save import duty. Customs authorities in Nigeria, Brazil, and Saudi Arabia use reference pricing databases. If your declared value is significantly below market, they'll re-assess at a higher value — plus penalties. Declare the true transaction value. The commercial invoice is your evidence.
Visit novapump.cn for payment term options and complete documentation support for your specific import destination.