Chinese supplier refund terms: what to agree
Agree the refund amount and currency, any conversion date and rate, who covers bank deductions, and when the full amount must reach your account. Specify how you will confirm receipt and how any shortfall will be paid. Ask Cambridge China Bridge to help clarify the supplier's proposed payment terms.
Put the payment terms beside the settlement amount
Before accepting, ask for a written payment schedule identifying the buyer, supplier, affected order, refund amount and receiving account. State whether the payment is a cash refund or credit against a future order. Avoid accepting a cash settlement that leaves the supplier free to substitute order credit.
Our faulty goods and claims guide covers the underlying dispute. This guide focuses on getting the agreed refund into your account. If acceptance includes a release of claims, ask your adviser to review its wording and propose that closure depends on full receipt.
Fix the currency and any conversion method
Name the refund currency in full and check that your account can receive it. Prefer an agreed amount in that currency where possible. If conversion is needed, record the original amount, currency pair, conversion date, named rate source, rate direction and rounding method. Say who bears any further conversion by the receiving bank.
Avoid wording such as 'equivalent in sterling at the current rate'. Ask for the resulting refund amount to be confirmed before acceptance. HMRC publishes exchange rates for duty and import VAT purposes; choose the settlement conversion method explicitly rather than assuming a customs rate is the bank's rate. See our supplier quote currency guide for the original purchase currency.
Agree the amount after bank deductions
Specify whether the refund is the amount sent or the net amount you must receive. Ask the supplier to cover sending, intermediary and receiving bank charges if your agreement is for a net refund. Confirm the available payment route and charge instruction with the banks before relying on it.
Include a shortfall arrangement: how deductions will be evidenced, who pays the difference and the deadline for that payment. Do not rely solely on 'supplier pays fees' if intermediary deductions could still reduce the credit. Our supplier payment guide covers payment methods.
Set a deadline for receipt
Write a calendar date, time and time zone by which the full agreed amount must be available in your account. Distinguish this from the date the supplier instructs its bank. Ask the supplier to allow for bank processing and holidays rather than promising only to send by the deadline.
If payment is split, list each amount and its receipt deadline. Agree when the supplier will send transfer details, who will trace a delayed payment and when you will be updated. Avoid an open-ended promise to refund 'after bank approval'; ask for a dated payment plan before accepting.
Confirm receipt from your own account
Ask for the transfer reference, payer name, amount, currency and sending date. Check any unexpected payer or changed account details through a contact channel already known to you. A transfer receipt helps trace payment, but use your own bank record to confirm the amount credited and available.
Name the person who will reconcile the credit against the settlement and send written confirmation. If it is short, acknowledge only the amount received and identify the balance outstanding. Keep the settlement, transfer evidence, bank credit and correspondence together; use our refund reconciliation guide for matching the records.
Frequently asked questions
Should a Chinese supplier refund me in sterling?
Agree a currency your account can receive. If you choose sterling for a refund originally calculated in another currency, fix the conversion method and resulting amount before acceptance.
Who should pay bank charges on a supplier refund?
Negotiate this explicitly. If you expect a net refund, ask the supplier to cover sending, intermediary and receiving charges, and agree how any deduction will be topped up.
Does a bank transfer receipt prove my refund arrived?
Use it to trace the payment. Confirm receipt from your own bank record, checking the credited currency, amount and availability before acknowledging full payment.
What if the supplier sends less than agreed?
Record the amount received, obtain evidence of deductions and request the outstanding balance under the agreed shortfall terms. Keep your acknowledgement specific to the payment actually received.