TT Payment Terms in International Trade

TT payment terms (Telegraphic Transfer, also called wire transfer or bank transfer) are the most common payment method in international trade for piping materials and industrial equipment. A TT payment is a direct electronic transfer of funds from the buyer’s bank to the seller’s bank account. TT payments are fast (1-3 business days), relatively inexpensive, and do not require documentary credit facilities, making them the default method for transactions between established trading partners.

TT Payment Terms Types

TT Type	Timing	Risk to Buyer	Risk to Seller	Common Usage
TT in Advance (100%)	Before production	High (no goods guarantee)	None	Small orders, new suppliers
TT Advance + Balance	30% advance, 70% before shipment	Moderate	Low	Most common for piping materials
TT Against Documents	Upon receipt of shipping documents	Low	Moderate (goods already shipped)	Established relationships
TT After Delivery	30-90 days after goods arrival	None	High (goods delivered, no payment guarantee)	Long-term contracts only
TT Against BL	Upon receipt of Bill of Lading	Low	Low-Moderate	Balanced risk approach

Typical TT Payment Structures

The most common TT structures for piping and industrial material procurement are:

Structure	Advance	Balance	When Balance Is Paid
30/70	30% with PO	70%	Before shipment / against documents
20/80	20% with PO	80%	Before shipment
50/50	50% with PO	50%	Before shipment
100% Advance	100% with PO	-	Not applicable
Net 30/60/90	None	100%	30/60/90 days after BL date

Considerations

Speed: TT payments typically clear within 1-3 business days via the SWIFT network. This is faster than Letters of Credit (which require document negotiation) and significantly faster than documentary collections.

Cost: Bank charges for international TT transfers range from $15-50 per transaction, compared to 0.1-2% of the transaction value for LC fees. For large orders (common in piping procurement), TT is substantially cheaper.

Risk management: The 30/70 structure (30% advance, 70% before shipment) is the industry standard for piping material orders because it balances risk. The advance covers the seller’s raw material procurement, while the buyer retains 70% use until production is verified complete. The balance is typically paid against presentation of a third-party inspection certificate and commercial invoice.

Currency: TT payments are made in the agreed contract currency (typically USD for piping materials). The buyer bears the exchange rate risk if paying in a foreign currency.

Common Mistake

Paying 100% TT in advance to an unknown supplier without a performance guarantee. If the supplier fails to deliver, the buyer has no banking instrument to recover the funds. For new supplier relationships, use a 30/70 structure with advance payment supported by a bank guarantee, or use a Letter of Credit instead.

TT payment terms are often combined with Incoterms to define a complete commercial arrangement. For example, “FOB Shanghai, 30% TT advance, 70% TT against BL copy” specifies both the delivery terms and the payment structure.

Read the full guide to Incoterms