Before Paying a China Supplier: A Deposit Checklist

You are ready to pay a supplier’s deposit. Have you checked who receives the money, what the factory must make and when the next payment is due? Use this guide to check the company, product files and payment terms before the transfer. It also shows what to do if bank details change.

Match the seller, contract and bank details

Record the seller’s legal name and check its current business records. Match that name to the contract and invoice. Then check the proposed bank beneficiary, which is the account holder who will receive the funds. Do not rely on a logo or a salesperson’s display name.

A different bank name may have a valid reason. An export agent or another group company may handle the payment. Ask for a written explanation of that role and have it reviewed. A mismatch is a reason to check, not automatic proof of fraud.

Take special care when bank details change late in the process. Confirm the change through a contact route you already trust. Do not use only the new phone number supplied in the same message. Ask your bank what checks it can make before the transfer.

See our supplier verification approach for separating company records, factory claims and payment-recipient questions.

Confirm exactly what the factory will make

A price and product name are rarely enough for a full order. Link the purchase order to the current drawing, parts list, sample record, and packing rules. Include quantity, delivery terms, and any approved differences from the original request.

List open points before payment. Some may be small enough to resolve later. Others may change the product or price. The buyer’s technical owner should decide which must be closed before production starts. Do not let an open question become a silent factory choice.

If a sample was approved with changes, describe those changes clearly. State what proof is needed to show that they were made. A note that says “same as sample” may be unclear if different people hold different samples or file versions.

Use the product specification checklist to organize the files that support the order.

Agree what must be done before each payment

A milestone is a stage with a clear result. It might be approval of a sample, completion of a defined amount of work, or review of a final check report. State the result and the records needed to show it has been reached.

Agree on payment stages that fit the order. A standard percentage copied from another deal may not fit your risk or the supplier’s costs. Discuss what must be paid for early and what remains at risk later. Have the terms reviewed if the value or complexity calls for it.

Also agree on what happens if work fails a check or is late. The contract should explain the review and remedy process. Do not assume you can stop a payment simply because a new concern arises. Your next step should reflect the terms and suitable advice.

The U.S. International Trade Administration’s Trade Finance Guide distinguishes advance payment, letters of credit and other payment methods with different risks for buyer and seller. Our milestone checklist is a purchasing recommendation, not a bank guarantee. Agree the payment conditions and required evidence in the contract.

Real cases: a changed bank account before payment

In April 2018, a finance employee at a trading company in Hangzhou received an email from a “partner” saying its bank account had changed. She emailed another business contact to check, got a confirmation and paid. The sender’s address had two letters swapped, and the second contact had been faked too. The company called the police when the real partner said it had received nothing. Police and the bank acted quickly, and 238,300 euros were stopped abroad and returned two days later, according to a report by the Dushi Kuaibao newspaper (in Chinese).

Not every case ends that way. Australia’s Scamwatch published the story of a business that lost $190,000 when its supplier’s email appears to have been hacked. The invoices looked genuine, the email address was correct, and the business found out only when the real supplier phoned about the missing money.

The lesson is to build a check process before urgency appears. An email cannot confirm another email. Call a saved number before paying a new account, and decide who may approve bank changes and which records are needed. A second person on the buying team can help check that the details match the approved file. If money has already gone, contact your bank and the police at once.

Follow up on unclear or changed details

Several patterns deserve a closer look. The seller may avoid naming the production site. It may change the price after a sample is approved. It may claim a test result but provide no record tied to the exact product. Each point needs a clear answer.

Ask what evidence would close the gap. A factory role can be supported by relevant records and a suitable site check. A test claim needs a report that matches the model and can be checked with the issuer. A low price needs a clear scope and list of exclusions.

For each answer, record who supplied it and when. Separate what the seller says from what someone else has checked. Both may be useful, but they are not the same. Avoid calling a supplier “safe” based on a few records that leave key questions unanswered.

Have a second person check the transfer

Decide who prepares a payment and who checks it before the first deposit is due. Use the approved order file as the reference. Compare the beneficiary name, account details, currency, amount and payment purpose. The check should use the final invoice, not a screenshot copied from an old chat.

Give the reviewer a way to challenge a mismatch without pressure. A deadline from the seller may be real, but it does not remove the need to understand who receives the money. If a valid export agent is involved, keep the agreed role and payment instruction with the contract. Ask your advisers what documents are needed for that arrangement.

Record the decision, date and person who approved it. Limit access to bank details to the people who need them. If the same supplier later changes its account, repeat the trusted-contact check. A successful earlier payment does not prove that a new instruction is genuine.

Plan the next payment check

After the deposit, update the order plan with the next agreed milestone. State what work must be complete, what evidence is due and who reviews it. For example, the next stage may require a sample decision or an agreed production report. Use the actual contract rather than adding a new condition after the seller has started work.

If there is a problem before the next payment, ask three questions. Has the agreed work been done? Are the required records complete? What does the contract say happens if a check fails? A missing photo, a late report and a defective part may require different responses.

Keep enough time to arrange the payment, but do not confuse available funds with approval to pay. Buying, quality and finance staff should know who clears each step. If your own team causes a delay, explain it honestly. Do not present an internal cash delay as a product fault.

Keep the approved file with the payment record. It should be easy for a colleague to see why the payment was cleared. Keep final payment approval with your own team.