For those conducting business in China, Hong Kong, and Taiwan, one of the best ways to facilitate the transfer of funds is through Telegraphic Transfers, or TT payments.
In this article, we’ll go over everything you need to know about TT payments from what they are to how you can use them for your business.
A.K.A Telegraphic Transfer
Telegraphic Transfer is a popular transfer mechanism that is also often referred to as the “electronic funds transfer” (EFT), or simply a “wire transfer”.
TT Payments are capable of making secure and quick transactions from one banking institution to another.
In most cases, TT payments can be completed in as little as two business days or the maximum duration of four business days.
International transfers through TT payments are facilitated by the Society for Worldwide Interbank Financial Telecommunication or SWIFT.
As we’ve covered before in our article about SWIFT, the system allows for quick transactions while maintaining a high level of security.
Depending on the circumstances of the transfer, TT payments can carry different costs.
Variables such as the amount being transferred, the timing of the transaction, sender and recipient location, and regional regulations can play a role in the cost associated with a transaction.
The fees associated with a TT payment vary depending on the monetary institutions involved, but for the speed and security provided by these transfers, the cost is likely worth it.
How to Perform a TT Payment
To make a telegraphic transfer, you need to provide some information to the financial institution of your choosing.
This could be the bank through which you do business, for example.
You must provide the transferring institution with information about where you are sending the money.
This information includes:
- Your Account Number
- The Account Number of the Recipient
- Information About the Corresponding Financial Institution
Additionally, you will likely be required to provide some personal information so that the institution through which you are transferring funds can confirm your identity.
This information is for security purposes.
Using TT Payments to Pay Chinese Suppliers
TT payments through the SWIFT system are the most common method of payment for international business in Asian countries thanks to the quality of the system.
Here’s how you can use TT payments for your business operating in Asia.
When requesting a TT payment, your supplier will likely send you a “Pro Forma” invoice.
This invoice will include their bank account details.
All you need to do is fill your banking and personal details into the form and bring the form to the commercial department of your bank.
Here are some tips to make sure that your TT payments process goes smoothly:
1. Contact your bank in advance.
If you alert your bank to the fact that you’re making TT payments in advance, they can provide you with all of the information you need
This means that when the invoice arrives, you are immediately prepared to fill it.
Otherwise, there could be portions of the form that you cannot fill out without first asking your bank, which wastes time.
2. Provide the Right Name
Translating your company name into a language different from that of the country it’s based in may cause confusion if, for example, your Chinese supplier’s bank registered your company name in English.
3. Avoid spelling mistakes.
Perfect spelling and number entry is extremely important.
Incorrectly entering your bank account number by one digit will nullify the transaction.
Additionally, misspelling any company or personal information will cause the transaction to be put on hold for an indeterminate amount of time.
Be especially careful about spelling when you’re writing information in any language that isn’t your native language.
4) Long Name? Use the Address Field
Is your company name longer than the provided name field?
You can actually continue using the Address Field to complete your name.
This is not a problem, as many TT forms recommend this course of action, and it is a recognized solution.
How to Negotiate with TT Payments
When performing telegraphic transfers with business partners in Asia, your partners or suppliers will often require certain terms and conditions to ensure a fair process.
For example, your suppliers may ask you to send partial deposit pre-production.
This applies if your partners are manufacturing your product.
There are many reasons why your supplier may ask you to do this.
The most common is to cover the costs of the components they need.
It’s also to ensure that your TT payment connection is established through the bank or to ensure goodwill depending on the industry and nature of your business.
This portion is typically between 20-30% of the total agreed amount.
Never allow a supplier to charge you more than this percentage before production has begun.
Paying a supplier large portions of your total payment will make manufacturing your product a low priority for them, and the manufacturing process will likely take longer.
Things like this will greatly affect your business in the long run, so you will need to be able to negotiate better TT payment terms with your suppliers.
Here are a few factors that will increase your leverage when dealing with suppliers:
- Arrange financing: One way to increase the favorability of your terms is to put in place strong financial guarantees for your suppliers.
- Having a Presence in the Supplier’s Country. Having a presence in the country of your supplier further increases the priority of your product. Additionally, any TT payments made within the same country are quicker and carry cheaper fees.
TT payments are a quick, safe, and efficient transfer solution for businesses all around the world.
If you’re conducting business in China, Taiwan, or Hong Kong, this guide will help you immensely when making TT payments with your business partners.
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