CAD, cash against documents, means you pay for the goods in return for the shipping documents that let you collect them. In formal banking terms it is a documentary collection, documents against payment. In Indian agri trade, CAD often also means paying the balance against scanned documents emailed by the supplier, before the originals or a telex release follow.
Ask which version a supplier means, because the risk is different. This is general guidance, not financial or legal advice.
The two forms of CAD
- Through banks. The supplier's bank sends the originals to your bank. Your bank releases them when you pay. Collections are commonly handled under the ICC Uniform Rules for Collections, URC 522. Your bank does not promise to pay, unlike a letter of credit.
- Against scanned copies. The supplier emails the bill of lading, invoice, packing list and certificates. You pay the supplier directly. The supplier then couriers originals or surrenders the bill for a telex release.
Risk for each side
For you, CAD means the goods have shipped before you pay the balance. But you pay against paper, before you see the goods at your end. If quality is wrong, you have already paid. Inspection before and during loading in India is what protects you here.
For the supplier, CAD means goods are on the water before full payment. If you refuse to pay, the supplier must find another buyer at your port or ship the goods back. That is why most Indian suppliers combine CAD with an advance. See is a 30 percent advance safe.
Bank collections keep the originals with the banks, which some buyers prefer, but they add fees and a few days of handling. Scanned CAD is faster and cheaper, but relies more on trust between you and the supplier.
What to check before paying
- The bill of lading copy shows your goods, container and seal numbers, and the right ports.
- The shipped on board date is within the agreed period.
- Invoice, packing list and bill agree on quantity, weight and description.
- Any certificates you require are included: phytosanitary, origin, health, analysis.
- The independent inspection report, if agreed, is attached and clean.
- The bank account belongs to the supplier company, as already confirmed by phone.
Agree the mechanics in writing
- Which documents trigger payment, listed exactly.
- How many days after receiving scans you have to pay.
- When and how originals or the telex release follow.
- Who pays bank collection charges on each side.
- What happens if documents contain errors.
How we help
We supervise loading, record container and seal numbers, and check the scanned document pack against the contract before you release the balance. Our guide to what a bill of lading is covers the key document. Ask for a free sourcing review.