We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Cash Against Documents?

Malcolm Tatum
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Cash against documents is a type of transaction in which the title for purchased goods is released to the buyer after the total sale price is paid using cash. Often, a commission house or a similar financial institution upon verification of the cash payment handles the actual transfer of title. Usage of this method is commonly employed with transactions that involve the purchase of exports.

The process for CAD, or cash against documents, in an export environment is fairly straightforward. After accepting an order from an international customer, the exporter prepares the export documents required by both the country of origin and the destination. Among the documents is a form that is normally referred to as an Export Collection Form. This form, along with other manifests and copies of shipping documents, is forwarded to the bank used by the exporter. While it is not always necessary, many exporters choose to prepare a Bill of Exchange, and include that document with the other forms.

As the next step in a purchasing using the cash against documents method, the exporter’s bank forwards the necessary documents to the bank designated by the purchaser or importer. The documents are provided with a proviso that they are not to be released to the importer until payment for the shipment is made in full. Until the payment is received by the exporter’s bank, the transaction is not considered complete.

Once the importer’s bank receives authorization to honor the exporter’s invoice, cash payment is electronically transferred to the exporter’s financial institution. After receiving confirmation that the payment was executed and posted properly, the importer’s bank releases all documents pertaining to the transaction to the buyer.

Many banks charge fees for executing a cash against documents transaction. In some instances, the seller covers all bank charges. However, it is more common for buyers to cover any charges issued by the banks at each end of the transaction. Typically, the seller adds the bank charges from the point of origin onto the invoice, while the importer’s bank normally debits the account used to issue the cash against documents payment.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
By anon287257 — On Aug 24, 2012

How long could the buyer delay getting the document? Is there any time limit, or does it depend on the buyer himself?

What can the exporter can do if the buyer refuses the document?

By anon286255 — On Aug 20, 2012

In a case of CAD, when documents arrive at the consignee bank, is there any limited time to accept document and pay its value or not?

By anon284925 — On Aug 13, 2012

Is deferred payment possible under CAD terms?

By anon257443 — On Mar 26, 2012

What is the protection for the buyer?

By Anona — On Jun 23, 2011

What is happening if the bank has given physical control of the goods to the buyer prior to paying seller? What is the seller recourse, and under what rule?

By anon181018 — On May 28, 2011

which one is beneficial in imports: L/C or Cash on Delivery?

By anon152752 — On Feb 15, 2011

Agree will most of the comments made, CAD offers no security but can be enhanced by implementation of Credit Insurance cover, if you can get it. Cover may be available for certain exporters. a new policy is available search self underwriting credit insurance - where you can write your own limits in line with your normal credit control disciplines.

By anon116203 — On Oct 06, 2010

anon, you will need to get credit insurance in place before the goods are released from your manufacturer. this costs about 1.5 to 2 percent of the cost of the container. If the importer does not pay, the insurance company covers the cost!

By anon86167 — On May 24, 2010

Who is the consignee on the B/L and Airwaybill in case of CAD payment terms?

Bank or customer?

By anon84639 — On May 17, 2010

1.there is no protection, if the buyer decides not to buy. It is a risk for CAD. For protection it must be LC.

By anon83753 — On May 12, 2010

What is the protection for the seller as the goods have already left his country? What if the buyer decides not to buy?

By anon72417 — On Mar 23, 2010

In case of CAD, when documents arrive at the consignee bank, is there any limited time to accept document and pay its value or not?

By anon70594 — On Mar 15, 2010

My simple question is do buyer have to prepare any docs in his bank like LC for CAD?

if yes, then advise what docs.

Second, can he get also credit facility same like LC for CAD. Can anybody can help me answering my question?

By anon43206 — On Aug 26, 2009

Who is the consignee on the bill of lading or Airwaybill when payment terms are CAD?

By Drillserve — On Aug 22, 2009

Who is the consignee on the bill of lading when payment terms are CAD?

By anon37245 — On Jul 18, 2009

What is diffirence between L/C and CAD ? And which is more essier to use for export business ?--Rafiq

By ISijs — On Mar 30, 2009

Who is the consignee on the B/L in case of CAD payment terms?

Bank or customer?

By mohamedgarad — On Feb 26, 2009

What is the protection for the seller as the goods have already left his country? What if the buyer decides not to buy?

By anon26367 — On Feb 12, 2009

Shipping docs are same as any normal export you process in accordance to delivery terms and regulations.

There is a risk though: if the buyer doesn't want to pay - you may have to return the goods on your account.

By anon14767 — On Jun 23, 2008

How must shipping documents be arranged when CAD is the terms? Is there a sample B/L used in CAD transaction?

By mdt — On May 31, 2008

That is where the terms and conditions of the sale come into play - what provisions for protection and recourse are found there? And are those terms and conditions enforceable in both the country of origin and the country of of termination for the transaction? These need to be considered before the buyer agrees to enter into the transaction with the seller.

By anon12929 — On May 16, 2008

what is the protection for the seller as the goods have already left his country? What if the buyer decides not to buy?

Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.