Durian Wholesale Payment Terms: TT, LC, or DP? What First-Time Importers Need to Know
The supplier wants 50% deposit upfront and 50% balance before shipment. That's $250,000 paid before you've seen any product or verified it's actually in the container heading your way. Is this normal? Or are you about to get scammed? Here's what payment terms are actually standard in wholesale durian trade, what protects buyers versus suppliers, and how to navigate first-order payments when you have zero relationship history.
Payment terms feel riskier in durian imports than buying domestic products because you're dealing with suppliers overseas you've probably never met, sending five or six figures to foreign bank accounts, and hoping product actually arrives as promised. Understanding standard terms and protection mechanisms helps you assess what's reasonable risk versus what's a red flag signaling potential fraud.
Standard Payment Terms for New Buyers
Expect 30-50% deposit upon order confirmation for first orders with new suppliers. This deposit secures your slot in the supplier's production schedule and demonstrates you're serious. Suppliers receive hundreds of inquiries monthly, most going nowhere. The deposit separates real buyers from time-wasters.
The balance – remaining 50-70% – is typically due before shipment or against shipping documents. "Before shipment" means you pay when supplier notifies you the container is ready to load, before it actually ships. "Against documents" means you pay when supplier provides shipping documents (bill of lading, packing list, etc.) proving the container loaded and is in transit.
Why such heavy upfront payments? Frozen durian is perishable with limited shelf life even when frozen. Suppliers can't afford to produce product, freeze it, and have buyers disappear. The deposits and pre-shipment payments protect suppliers from bearing all the risk of production for customers they don't yet know and trust.
For perishable goods like durian, payment terms are always less favorable than shelf-stable products. If you're buying electronics or dry goods, you might get 30-60 day payment terms after delivery. Frozen durian? Expect to pay before seeing product on first orders. This is industry standard, not a sign of problematic suppliers.
High deposit requirements are normal specifically for frozen fruit because the product is produced for your order, frozen to your specifications, and allocated to you. Suppliers can't easily resell custom-packaged frozen durian if you back out after production. Your deposit compensates for this allocation and production risk.
Payment Methods Explained: TT, LC, and DP
Telegraphic Transfer (TT), also called wire transfer, is direct bank-to-bank money transfer. You instruct your bank to send funds to supplier's account. It's fast (1-3 days), simple, and has minimal fees ($25-50 per transfer). But it offers essentially zero buyer protection – once money leaves your account, it's gone. If supplier never ships product, recovering funds requires legal action across international borders.
Letter of Credit (LC) is a bank guarantee protecting both parties. Your bank issues a document guaranteeing payment if supplier meets specified conditions (shipping documents, quality certificates, specific delivery terms, etc.). Supplier gets confidence they'll be paid if they perform. You get confidence that payment only releases when supplier proves they shipped compliant product.
LCs cost 1-3% of transaction value plus bank fees (typically $500-2,000 in total costs). For a $250,000 durian container, expect $3,000-8,000 in LC costs. The expense buys significant security – banks verify documents before releasing payment, creating professional oversight that reduces fraud risk dramatically.
Documents against Payment (DP) or Documents against Acceptance (DA) sit between TT and LC. Supplier ships product and sends shipping documents to your bank. You pay (DP) or accept a draft promising future payment (DA) in exchange for documents needed to clear customs and claim your goods. This protects suppliers better than post-delivery payment while giving buyers proof shipment occurred before full payment.
First-time buyers with unknown suppliers should seriously consider LC despite the cost. Yes, it's 1-3% extra expense. But that cost provides huge risk reduction on six-figure transactions with suppliers you've never worked with. Think of it as insurance against the supplier taking your deposit and never shipping product.
How Payment Terms Improve Over Time
Your first order typically requires 50% deposit via TT plus 50% balance before shipment via TT, or full payment via LC. Suppliers don't know you, don't trust you yet, and want maximum protection. This is normal and expected – don't be offended.
After 2-3 successful orders paid on time with no issues, suppliers start relaxing terms. You might negotiate to 30% deposit and 70% balance before shipment. This reduction reflects the trust you've built through demonstrated reliability. Suppliers now know you actually pay and follow through on orders.
Established relationships (5-10+ successful orders over 12+ months) can unlock significantly better terms: 30% deposit and 70% against copy of shipping documents rather than before shipment. This means supplier ships the container, sends you copies of documents proving shipment, and you pay the balance while product is in transit. You get proof product shipped before paying the balance.
Long-term partners with excellent payment history might achieve net 30-60 day terms where you pay after product arrives. This is rare for perishable frozen goods because it puts all risk on suppliers, but it happens with buyers who've proven absolute reliability over years of regular large orders.
The path to better terms is simple: pay on time, every time, with no disputes or delayed payments. Each successful order builds trust. After just 3-4 orders, most suppliers will discuss improved terms if you've been a model customer.
Red Flags in Payment Terms
100% upfront payment demanded before any production or allocation is major red flag. Legitimate suppliers might require large deposits, but demanding full payment before they've even started processing your order suggests either extreme desperation or potential fraud. Standard is deposit to secure order, balance before or at shipment – not all money before supplier does anything.
Payment requested to personal accounts rather than company accounts should trigger alarm bells. You should pay "ABC Durian Export Company Ltd" to an account in that exact company name. If payment instructions say wire to "John Chen personal account" or a company name different from your supplier, question why. Legitimate businesses have business accounts.
Payment to third-party companies is another warning sign. Your supplier is "Malaysia Durian Supply," but they want payment sent to "Singapore Trading Services PTE." Why? Legitimate reasons exist (subsidiary companies, payment processors), but get clear explanation in writing. Many scams involve diverting payments to unrelated entities that disappear.
Unwillingness to use LC even when you offer to pay all LC fees suggests supplier lacks the infrastructure, banking relationships, or legitimacy to work with international banking systems. Professional exporters work with LCs routinely. Suppliers who refuse or make excuses about LC difficulty are either very small/inexperienced or potentially fraudulent.
Pressure to pay quickly without proper documentation and contract review is classic scam behavior. "Pay today or lose this price," "Other buyers waiting," "Price only valid until tomorrow" – these pressure tactics push you to send money before doing due diligence. Professional suppliers give you reasonable time to review contracts, verify terms, and arrange payment properly.
Vague contract terms about what happens if product doesn't arrive, is wrong quality, or shipping is delayed means supplier wants maximum flexibility to underperform without consequences. Good contracts specify product specs, shipping timelines, quality standards, and remedies if supplier fails to meet terms. Vague contracts protect only the supplier.
Protecting Yourself as a Buyer
Use LC for first orders with unknown suppliers if the order value justifies the cost. On a $250,000 container, spending $5,000 for LC protection is reasonable insurance. On a $10,000 sample order, LC costs might not make sense – but then your risk exposure is lower anyway.
Verify supplier business registration and legitimacy before sending any money. Check company registration in their country's business registry. Verify physical address exists and matches what they claim. Search for any fraud complaints or warnings about the company. This due diligence costs time but prevents expensive mistakes.
Never pay 100% upfront to completely unknown suppliers regardless of promised discounts for early payment. The "savings" from 10% discount for full prepayment disappear entirely if supplier takes your money and ghosts you. Keep some payment leverage until you receive product or shipping proof.
Get everything in writing: product specifications, quantities, pricing, payment terms, shipping timeline, quality standards, and recourse if supplier fails to perform. Email exchanges work, but formal contracts are better. Written agreements create accountability and legal basis for claims if problems occur.
Use secure payment methods through established banking systems. Avoid Western Union, MoneyGram, cryptocurrency, or other cash-equivalent transfers that offer zero recourse if supplier doesn't perform. Bank wire transfers leave paper trails and work through legitimate banking infrastructure.
Start with small sample orders to test supplier reliability before placing container orders. Yes, samples cost more per kilogram via air freight. But spending $5,000 on samples verifies the supplier actually sends product as described before you risk $250,000 on a container. Many frauds are exposed at the sample stage when "suppliers" make excuses why they can't send samples.
Request references from supplier's existing customers and actually contact them. Legitimate suppliers have other buyers who can vouch for them. If supplier claims they export 1,500 tonnes annually but can't provide even one reference from a satisfied customer, that's suspicious.
When to Walk Away from Payment Terms
If supplier demands payment terms far outside industry norms with no reasonable explanation, walk away. Some flexibility exists, but 100% upfront payment to unverified new supplier is outside reasonable norms for durian trade.
If you feel pressured or uncomfortable with payment arrangements, trust your instincts. Feeling like you're being rushed into payment before you're ready is often accurate intuition that something's wrong. Good suppliers want your business long-term and will work within reasonable timelines.
If supplier can't or won't use professional banking systems and wants alternative payment methods, that's disqualifying. Professional businesses use business bank accounts and standard international payment mechanisms.
If contract terms are intentionally vague or supplier resists putting agreements in writing, that's a relationship-ender. Either they're unprofessional (which creates risks even if they're not fraudulent) or they're setting up situations where they can underperform without accountability.
Remember that plenty of legitimate suppliers exist who will work within reasonable payment terms and protection mechanisms. Don't compromise your security because one supplier offers great pricing but sketchy payment terms. The risk isn't worth any price savings.
Building Long-Term Payment Relationships
Pay on time – this single factor determines how quickly payment terms improve. Late payments, disputes, or requests to extend payment deadlines damage trust and prevent term improvements regardless of order volume.
Communicate proactively if any issues arise. If you need to adjust an order or modify terms, discuss early with supplier rather than creating last-minute problems. Professional behavior builds reputation that translates to better terms.
Place regular orders rather than one-off purchases. Suppliers offer better terms to customers who provide consistent business. Monthly 1,000kg orders build better relationships than annual 12,000kg one-time orders even though total volume is identical.
Be understanding of supplier's risk too. You want protection and favorable terms, which is reasonable. But suppliers also face risks of buyers defaulting, refusing deliveries, or disputing payment. Acknowledging their legitimate concerns and working toward mutually protective terms creates partnerships rather than adversarial transactions.
Start discussions about improved terms after proving reliability through 2-3 successful orders. Don't demand better terms on first order, but absolutely raise the topic after you've demonstrated you're a reliable customer worth retaining.
The Bottom Line on Payment Terms
30-50% deposit and 50-70% balance before shipment is industry standard for first orders with new suppliers in frozen durian trade. This isn't negotiable on initial orders – suppliers need this protection given perishable product and international transaction risks.
Payment terms improve with relationship history. After 2-3 successful orders, terms typically relax to 30/70 splits or payment against documents. After 5-10+ orders, potential for significantly better terms including post-shipment payment.
Use Letters of Credit on large first orders with unknown suppliers despite the 1-3% cost. The protection justifies the expense on six-figure transactions. For smaller sample orders, well-documented TT payments to verified business accounts can work.
Red flags exist: 100% upfront demands, payment to personal accounts, third-party payment routing, pressure tactics, unwillingness to use LC, and vague contracts. Any of these should trigger serious caution or complete avoidance of that supplier.
Protect yourself through verification (business registration, references, sample orders) and proper documentation (written contracts, secure payment methods, clear terms). Many legitimate suppliers exist – don't accept risky terms from questionable suppliers just because pricing seems good.
Take Action
Work with established durian suppliers who offer standard payment terms and welcome reasonable buyer protections like Letters of Credit. Submit an RFQ on CommoditiesHub – we connect you with verified suppliers who understand professional payment terms and have track records working with international buyers under secure payment arrangements.