Cash Against Documents (CAD)
Also known as: cash against documents, documents against cash, cad terms, cash against shipping documents
Cash Against Documents is a payment arrangement in which the buyer must make payment before receiving the shipping or title documents needed to take control of the goods. The seller ships the cargo and sends the relevant documents, often through a bank or appointed agent, with instructions to release them only after payment is received. These documents may include the bill of lading, commercial invoice, packing list, and other documents required for customs clearance or delivery.
CAD gives the seller greater payment protection because control of the shipping documents is retained until the buyer pays. It is generally less secure than a letter of credit because the bank usually acts only as a document-handling intermediary and does not guarantee payment. For the buyer, payment is made after shipment has taken place but before the documents needed to obtain the cargo are released.
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