What Is Cash Against Documents?

Cash Against Documents (CAD) is a payment method in international trade where the buyer pays for goods before receiving the shipping documents required to claim ownership, ensuring the seller is paid for the goods before they are handed over to the buyer.

‍

In a Cash Against Documents transaction, the seller ships the goods and submits the shipping documents to a bank or financial institution. The buyer then makes payment to the bank in exchange for these documents, which are required to take possession of the goods. This method reduces the risk of non-payment and ensures that the seller gets paid before handing over the goods to the buyer.

‍

Cash Against Documents works by having the buyer pay for goods before they receive the necessary shipping documents to claim them. Once payment is made, the buyer can obtain the documents and take possession of the goods.

In logistics, this method benefits your business by reducing the risk of non-payment, ensuring secure international trade transactions, and providing more predictable cash flow. It helps businesses maintain smooth operations in their supply chains, particularly in cross-border shipping and when dealing with unfamiliar buyers.

‍