Paying a new supplier: telegraphic transfer, deposits and letters of credit
The first order with a new supplier is where trust is thinnest on both sides. The supplier is committing stock to a buyer it has not been paid by before; the buyer is sending money to a company it has not received goods from. The payment method is how that gap is bridged — and choosing the wrong one, or doing the right one carelessly, is where first orders go wrong.
Our own terms are payment by telegraphic transfer in EUR or USD to the Francoalva Sp. z o.o. company account, with a 20–50% deposit to confirm the order and the balance before release of the goods. Anything else is agreed in writing, case by case.
The three common options
| Method | How it works | Good for | Watch out for |
|---|---|---|---|
| Telegraphic transfer (TT) | A bank transfer (SEPA or SWIFT) direct to the supplier’s account. | Fast, cheap, standard in FMCG wholesale. | Once sent, it is very hard to recall. Bank details must be verified. |
| Deposit + balance | Part paid to confirm the order, the rest before dispatch or against documents. | Splitting risk on a first order. | Be clear exactly what triggers the balance payment. |
| Letter of credit (LC) | Your bank promises to pay the supplier when it presents documents that match the credit exactly. | Large orders, new relationships, markets where banks require it. | Bank fees, slower, and strict document checks — small discrepancies delay payment. |
Telegraphic transfer: simple, so verify carefully
Most wholesale FMCG is paid by bank transfer. It is quick and inexpensive, and inside the EU a SEPA transfer in euros typically arrives within a working day. Its weakness is that it is practically irreversible. That makes the most important step not the transfer itself but confirming the account belongs to the supplier:
- Check the company in its official registry. For a Polish company that is the KRS (National Court Register): name, registration number, registered address and management board should match the proforma.
- For a Polish VAT-registered business, the Ministry of Finance’s public VAT payer list (the “white list”) shows the bank accounts the company has reported to the tax authority. The account on your proforma should be one of them.
- The account should be in the company’s own name, not a private individual’s or a third party’s.
- If bank details arrive changed by email, stop and call a number you already had — not one given in the same email. Changed-bank-details fraud is the most common way buyers lose money.
Deposits: what they are for
A deposit confirms that the order is real. It lets the supplier reserve or buy in stock, book transport and prepare documents without carrying the whole risk if the buyer disappears. In FMCG wholesale 20–50% is common, with the balance due before the goods are released. For a buyer, the protection is in the paperwork: the proforma invoice should state the deposit, the balance, what triggers it, and what happens if either side cannot complete.
Letters of credit: when they make sense
A documentary letter of credit moves the trust from the two companies to the banks. Your bank issues a credit, usually under the ICC’s UCP 600 rules, promising payment once the supplier presents a defined set of documents — typically the commercial invoice, packing list, transport document and certificates — that comply with the credit’s terms.
It works well for large orders and some markets, but it has real costs:
- Fees on both sides — issuing, advising, and if the supplier asks for it, confirmation by a second bank.
- Time to open and to examine documents.
- Strict compliance. Banks check documents, not goods. A misspelt name, a date outside the window or a description that does not match exactly can be a discrepancy that delays or blocks payment. The terms of the credit must be agreed with the supplier before the bank issues it.
For a typical pallet or partial-truck order, the cost and administration of an LC are usually out of proportion to the value. It is most often used on full containers and on routes where the buyer’s bank or regulator requires it.
Currency and charges
Agree the invoice currency before you pay, and send that currency where you can: converting at your bank, then again at the receiving bank, costs you twice. For SWIFT transfers outside the EU, choose who pays the bank charges (the “OUR / SHA / BEN” option) so that the full invoice amount arrives — a short payment delays release while the difference is chased.
What to tell us
If your bank or your own policy requires a particular payment method, mention it in the enquiry, together with the expected order size. We will confirm in writing what we can accept for that order before anything is paid.
Related reading: reading a proforma invoice, the EU export documents checklist, and VAT on exports from Poland.