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Cash Against Document (CAD) Process, Documents, Benefits and Disadvantages

Cash Against Document (CAD) Process, Documents, Benefits & Disadvantages


What is Cash Again Documents (CAD)

Cash Against Document is a payment method where the exporter ships the goods and sends the document representing the ownership of the goods to the importer’s bank through the banking system and where the delivery of the document to the importer is subject to the payment of the document price.

Cash Against Document (CAD) Process, Documents, Benefits and Disadvantages

There are many ways for Buyers and Sellers to protect themselves during business transactions (where freight is involved) one method is CAD. In CAD transactions, A Bank / Financials institution Serves as a Neutral Intermediary and Retains shipment documents to serve as Security until the payment is made by the buyer. CAD is also called Document Against Payment.

Cash Again Documents Process

  1. Buyer and Seller Agree on the CAD Term are clearly defined
  2. Seller Ships the Goods to Location of Buyer
  3. Seller takes Ownership Documents & sends to Seller Bank
  4. Seller Bank Send Ownership Documents to Buyer Bank
  5. Buyer pay Agreed amount to Buyer bank and receives Ownership Documents
  6. Buyer Received Goods from Customs based on ownership documents
  7. Buyer Bank pay Money to Seller bank after deducting charges
  8. Seller Bank pay money to Seller after deducting Charges

Parties Involved

  • Buyer (Importer)
  • Seller (Exporter)
  • Buyer’s Bank
  • Seller’s Bank


  • Commercial Invoice
  • Packing List
  • Shipping Bill of Lading
  • Certification of Origin
  • Insurance Certificate etc.,

Cash Against Document (CAD) Benefits

  • Easy to implement CAD
  • Compare to LC less Cost in CAD

Cash Against Document (CAD) Disadvantages

  • Lack of Guarantee on Buyer payment or not
  • Buyers cannot check the quality of goods
  • Chance of Goods reject / Poor Quality
  • Seller Receive payment after shipment

CAD Process the seller may find themselves in an unfavorable position if the buyer is unable or unwilling to complete the Purchase. It is always better to do Due Diligence about parties that are dealing & both parties understand the process completely by communicating openly and building trust and mutual support.