Pet Bag T/T Payments: Deposit Structure, Fees and Risk Control

Wholesale pet bag sourcing desk · Updated 2026-10-06 · 14 min read

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How a T/T Payment Actually Moves

A telegraphic transfer is an instruction from your bank to move funds to a beneficiary account, settled through correspondent banking relationships where the two banks have no direct relationship. The instruction carries the beneficiary name, account number, bank name, bank address and, for international wires, a SWIFT code. It is settled in a chain rather than end to end, which is why the money can take longer than either bank suggests and why intermediate banks can deduct charges.

The instruction also carries a charge code, and this matters more than buyers expect. Under SHA, charges are shared, and correspondent banks deduct their fees from the amount in transit, so the beneficiary receives less than invoiced. Under OUR, the sender bears all charges and the beneficiary receives the full amount. Under BEN, the beneficiary bears everything. For commercial orders OUR is the correct instruction, because it prevents the short-payment reconciliation that otherwise consumes a week of correspondence and can delay production slotting.

Transit time is one to three working days for a standard USD transfer, occasionally longer where a compliance review is triggered. Buyers should treat it as two to three days when planning, because a transfer initiated on a Friday afternoon before a holiday weekend will not be available to the supplier when they expect it.

Confirmations matter. A supplier should confirm receipt against the invoice, and the buyer should reconcile the payment against the invoice within the same week. Discrepancies are easy to resolve while recent and nearly impossible a year later, particularly across multiple orders with partial payments and credit notes.

One structural point deserves emphasis: the transfer is a payment instruction, not a contract. It carries no conditions, no quality requirement and no delivery obligation. Everything that protects the buyer has to sit in the commercial agreement and in the inspection arrangement, not in the payment itself.

A telegraphic transfer carries money and nothing else; it has no conditions attached, which is why every protection a buyer needs must sit in the contract and in an inspection gate rather than in the payment.

Deposit and Balance: Structuring the Split

The 30/70 split is standard because it approximates material cost. In a pet bag order, fabric, webbing, hardware, foam, zippers and packaging are purchased before cutting begins, and those inputs typically account for around a third of the ex-works cost. A deposit at that level means the supplier has committed real cash and the buyer has not financed the labour component, so both parties have something at risk through the 35-50 day production cycle.

Deposits above thirty percent change the leverage. A fifty percent deposit finances material plus much of the labour, and it weakens the buyer's position during production because the supplier has less outstanding to lose. Buyers are sometimes offered a better unit price in exchange; that trade should be evaluated as the price of a loan, because that is what it is.

Deposits below thirty percent are occasionally available, particularly from suppliers with strong balance sheets or during a slow booking period. They are worth accepting when offered, but pressing for them on a first order is counterproductive, because a supplier with no material commitment has little incentive to hold a production slot when a larger customer appears.

Some programs use three payments rather than two: deposit, progress payment at bulk completion, and balance at shipment. This reduces the amount exposed at any one time and gives the buyer a mid-cycle checkpoint, at the cost of one more administrative cycle. It is worth considering above roughly USD 60,000.

Whatever the split, the agreement should state what happens on buyer cancellation after material has been committed. A cancellation schedule tied to production progress prevents the argument that otherwise follows every cancellation, and it is fair to both sides.

Finally, deposit and balance should be in the same currency against the same invoice. Mixed-currency arrangements create an exchange exposure that has no commercial purpose and produces disputes when rates move between payments.

The Evidence Gate: What Releases the Balance

The balance payment is the buyer's only real lever, and the single most valuable decision in any T/T structure is what it is released against. Three options exist, and they are not equivalent.

Releasing against a promise is the weakest and unfortunately common. The supplier states that goods are ready and asks for the balance. Nothing verifies the statement, and once paid the buyer has no remedy beyond correspondence. This should be avoided except with a supplier who has a long, clean track record.

Releasing against a bill of lading is the standard. The bill evidences that goods were handed to a carrier, that the quantity and description were declared, and that a third party holds them. It does not evidence quality, but it does evidence existence, which is the main thing the balance is buying.

Releasing against a passed inspection report is the strongest where the buyer controls freight. The inspector confirms quantity, packing, workmanship and specification conformance against a named standard before money moves, which converts quality from a retrospective dispute into a precondition of payment. Independent providers such as SGS issue reports that both parties can accept.

Naming the standard is what makes the gate real. For this category, AQL 2.5 is the conventional acceptance level, and the agreement should state it, state who inspects, and state that a pass is a condition of the balance release. Without a named standard, an inspection report is an opinion.

Buyers should also set a deadline for their own side. A passed inspection followed by a week of buyer silence is a legitimate grievance, and shipments have been held for less. Five working days to release after a passed report is a reasonable symmetric obligation.

Where goods fail inspection, the agreement should state the remedy: rework and re-inspect at the supplier's cost, a price adjustment, or rejection. Deciding this in advance is what turns an inspection gate from a formality into a control.

Bank Fees, Correspondent Deductions and Who Bears Them

The visible fee is the sending bank's charge, commonly USD 15-40 for an international wire, and it is the smaller half of the cost. Where the two banks have no direct relationship, one or more correspondent banks handle the settlement and each may deduct USD 10-25 from the amount in transit. A payment of USD 9,000 can therefore arrive as USD 8,955, and the supplier sees an underpayment.

The remedy for deductions is the OUR instruction, which allocates all charges to the sender. It costs slightly more and removes an entire category of dispute. Buyers should make it a standing instruction rather than a per-payment decision.

Currency conversion is the larger hidden cost for buyers paying from EUR, GBP or AUD accounts. A spread of 0.5-1.5 percent on a USD 50,000 order is USD 250-750, which is more than every bank fee combined. Specialist foreign exchange providers frequently beat retail bank rates by a meaningful margin, and the comparison is worth making once per quarter rather than per payment.

Recalls and amendments are expensive and slow. A transfer sent to a wrong account can sometimes be recalled, but the process takes days or weeks and success is not guaranteed. Getting beneficiary details right, and verifying them by a route other than the one that delivered them, is far cheaper than fixing a mistake.

Buyers should also reconcile monthly. Accounts with multiple orders, sample charges, credit notes and partial payments accumulate differences that are trivial individually and material collectively, and a monthly reconciliation takes minutes where an annual one takes days.

Timing Transfers Against Production Milestones

Payment timing should follow the production plan rather than the calendar. In a pet bag program the milestones are order confirmation, sample approval, bulk completion, inspection and shipment, and each has a natural payment position.

The deposit belongs at confirmation, because it releases material purchasing and secures a slot. Delaying it delays the order: fabric and hardware suppliers generally require commitment before they allocate, and a production slot held without material commitment is not really held.

Samples are normally charged separately and settled before sampling begins. They are small amounts and bundling them into the order invoice creates reconciliation problems at exactly the point where speed matters, since sampling runs 6-10 working days and any delay there pushes the whole 35-50 day bulk cycle.

Where a three-payment structure is used, the progress payment belongs at bulk completion, evidenced by a packing list and either an inline inspection or a completion confirmation. It should not be tied to a calendar date, because a payment due on a fixed date regardless of progress is a loan with extra steps.

The balance belongs at inspection pass or at shipment. Allow three working days for the transfer to be visible before booking anything that depends on it, because a supplier who cannot see cleared funds will not release cartons.

Seasonality affects all of this. In the weeks before peak manufacturing periods, banks and suppliers both slow, and transfers initiated late in the week before a holiday can lose three or four days. Buyers working to a retail date should build that into the schedule rather than discovering it.

Buyers should also agree the sequence explicitly: which comes first, inspection or balance, and who books freight. Ambiguity here is the most common cause of a shipment sitting ready for a week while two parties wait for each other.

Payments should be triggered by production events rather than calendar dates, because a payment tied to a date rather than to progress finances the supplier without securing anything for the buyer.

Fraud Patterns That Target Wire Transfers

Wire fraud in sourcing is not sophisticated; it is procedural, and it exploits the moment when a buyer expects a routine instruction. The dominant pattern is email interception: a supplier's mailbox is compromised, and a message arrives with correct threading, correct signatures and changed bank details. The buyer pays, the money leaves, and the supplier never receives it.

The defence is a verification rule rather than vigilance. Any change to bank details must be confirmed by a second channel, meaning a phone call to a number already on file rather than one supplied in the email, or a confirmation through a platform account that predates the change. A rule applied mechanically beats attention applied intermittently.

A second pattern is the new supplier with urgent terms: a first order, a competitive price, and a request for full advance payment to an account in a third country. Legitimate suppliers with real capacity do not need this, and the request predicts the outcome.

A third is invoice substitution, where a proforma arrives with different details from the quotation: a different entity name, a different account, a slightly different total. Buyers should compare proforma against quotation line by line as a matter of routine, because the difference is often small enough to pass a glance.

A fourth is the partial-payment trap, where a supplier acknowledges a deposit and then requests a supplementary payment for a material price increase before production begins. Occasionally genuine, frequently not, and the test is evidence: a genuine increase can be documented with a supplier's own purchase invoice.

Buyers should also protect the basics. Limit who can authorise transfers, require two approvals above a threshold, and keep a standing beneficiary list so that any new account is visibly new. These controls cost nothing and remove most of the exposure.

Where a first transfer to a new supplier is unavoidable, a small test transfer is cheap insurance. Confirming that USD 100 reaches the intended account verifies the entire chain for a trivial cost, and it is standard practice in careful procurement teams.

Invoice Discipline on Repeat Programs

Repeat programs fail administratively rather than commercially. A buyer running quarterly orders accumulates invoices, credit notes, sample charges, freight adjustments and partial payments, and without discipline the account becomes unreconcilable within two years.

The first discipline is one invoice per shipment, referencing the order number, the proforma number and the packing list. Anything that does not reference an order should not be paid, because unstructured payments are the origin of most reconciliation failures.

The second is a standard invoice format requirement: unit price, quantity, total, currency, payment terms, delivery term and bank details in a fixed layout. It makes comparison easy and makes anomalies visible.

The third is currency consistency. If the program quotes in USD, every invoice should be in USD, and any request to settle in another currency should require a written rate fixed for the duration of the order.

The fourth is a monthly statement cycle. Asking suppliers for a statement of open items monthly, and reconciling it against the buyer's own record, converts a year-end problem into a five-minute routine.

The fifth is change control. Every specification change, quantity change or date change should produce a revised document with a version number, and the version should be cited on the invoice. This is what prevents the common dispute where goods were made to a specification the buyer believes was superseded.

A sixth discipline is worth adding once a program exceeds a handful of orders per year: a standing statement of account maintained jointly rather than reconciled retrospectively. Each payment, credit note, sample charge and freight adjustment is entered as it occurs, so both parties are working from the same number at any point in the cycle. Where a dispute arises about whether a deposit was received in full, the answer is then immediate rather than archaeological, and the conversation stays about the goods instead of about the ledger. Buyers who apply these disciplines usually find that commercial disputes almost disappear, because most disputes are documentation disputes in disguise. The commercial side of the relationship then has room to be about product and schedule, which is where the value is. Our notes on B2B payment terms set out how T/T sits alongside the other structures in a written policy.

When to Move Beyond T/T

T/T is not the answer for every order, and the decision to move should be made on four signals rather than on habit.

The first signal is size. Above roughly USD 50,000 per shipment, the unsecured deposit becomes material enough that a documentary credit issued under the ICC rules for documentary credits earns its USD 150-500 cost. Buyers who continue on T/T at that level are accepting a meaningful exposure for a modest saving.

The second is counterparty novelty. A first order with an unverified supplier is better served by platform escrow or by an inspection gate with a small deposit, simply because there is no track record to price. Our guide to trade assurance covers that option.

The third is dispute history. A supplier with two consecutive late deliveries or a failed inspection should revert to the stricter structure until performance recovers, regardless of how long the relationship has run. Terms should follow behaviour, not tenure.

The fourth is the buyer's own cash position. Where a program needs deferred payment to work, a usance credit or negotiated open account terms may be worth more than the risk reduction T/T offers, and the decision becomes a treasury one.

The reverse also applies. A supplier who has shipped on time, passed AQL 2.5 five times running, and never caused a reconciliation problem should not be kept on the strictest structure indefinitely. Relaxing terms is a legitimate reward and it improves the supplier's responsiveness, because their own cash position improves with it.

The mature arrangement for most pet bag programs is therefore simple: T/T 30/70 as the default, an inspection gate on the balance, a letter of credit above a stated threshold, escrow for first orders, and a quarterly review that moves suppliers between those categories on evidence rather than on sentiment.