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Common Questions About Foreign Trade Payments and Deliveries
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I amSOHO, the client insists on a 30% down payment plus 70% payment upon receipt of the bill of lading copy, but requires us to arrange the booking under FOB terms. Additionally, after the goods have been shipped, the client proposed to change the L/C, which concerns me about the potential risks. Is this kind of payment and delivery method common? How can we mitigate the risks?
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
The payment and delivery terms combination you described poses clear compliance risks. Firstly，under FOB terms，the seller has no obligation to book shipping space. If you voluntarily assume this responsibility，the choice of freight forwarder lies with you，which is an advantage，but you must ensure that the bill of lading consignee is set to "to order" and endorsed to retain ownership of the goods. Secondly，the 30% deposit + 70% payment upon presentation of the bill of lading is a high-risk method that relies entirely on commercial credit without bank involvement. If the client subsequently requests to change the L/C，you must note the following: L/C amendments must be processed by the original issuing bank，and the amendment fee is borne by the applicant. You have the right to refuse this. Key risk points。
1. The timing of releasing the bill of lading: It is recommended to insist on "releasing the document after payment" rather than "paying upon presentation"。
2. The letterhead of documents such as inspection certificates and certificates of origin must strictly match the L/C beneficiary。
3. Customs has been strictly cracking down on "under-declaration and over-invoicing" in recent years. Your declared import value must logically match the actual payment amount. It is recommended to sign a supplementary agreement to clarify the breach of contract liability for changes in payment terms.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
From the perspective of logistics chain control, the core of your problem is the cargo right transfer node. Under FOB, when the client designates the forwarder, the risk is that the forwarder might release goods without a bill of lading. If you book the space, be sure to choose a reputable first-class forwarder and insist on issuing a Master Bill of Lading (MBL) instead of a House Bill of Lading (HBL). Operation process: Within 24 hours after loading, send a draft B/L to the client and request confirmation with a payment slip; arrange telex release or courier the original after receiving payment. Regarding amending the L/C, this will extend the account period by at least 7-10 days (issuance + review time). If the goods have been shipped, you will be passive. Practical suggestions: 1. If goods are shipped, require the client to issue a sight L/C with confirmation; 2. If goods are not shipped, suspend loading until an acceptable original L/C is received; 3. All fees (amendment fees, courier fees) are explicitly borne by the client. Remember: Having the B/L means having the cargo rights, which is your biggest bargaining chip.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
The essence of the client's request is to shift the financial pressure. Directly refusing it might damage the relationship, but blindly accepting it would mean taking on unnecessary risks. You could respond as follows: "I understand your cash flow concerns, but for the long-term security of our cooperation, I suggest adjusting the payment terms to: 50% deposit + 50% upon presentation of the bill of lading, or accepting L/C with immediate and irrevocable payment. This way, you'll have bank credit protection, and we'll feel more confident in arranging production." This approach preserves the client's face while raising the cooperation threshold. If the client insists on the original plan, you need to set safety measures: 1. Conduct buyer credit checks through China Export & Credit Insurance Corporation (Sinosure) and ship within the credit limit; 2. Specify a 0.05% daily penalty for late payments in the PI; 3. Set the consignee of the bill of lading to "to order of shipper" to ensure ownership of the goods doesn't transfer until full payment is received. The core of business negotiations is making clients feel that "you're acting in their best interests." For example, emphasize that "L/C enhances your business credibility and facilitates future cooperation with other suppliers," packaging risk clauses as value-added services.