CAD, short for “Cash Against Documents”, is a payment method in which banks are used for intermediation in terms of payment and transfer of the export documents from the exporter to the importer. It’s also called Documents Against Payment (DAP). In CAD,
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L/C, short for “Letter of Credit”, is a contractual payment instrument that guarantees the importer’s payment to the exporter when the exporter ships the goods to the importer in conformity with the terms and conditions in the sales contract and presents the required export documents to the advising bank.
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Open account, also known as Cash Against Goods, is a payment method that enables the importer to pay for the goods after they are cleared at the customs of the importing country or on a fixed date after delivery, typically in 30 to 60 days.
While it is a risky payment option for exporters, importers are so keen on working open account as they will not pay for anything until the goods arrive at the importer’s place, checked and confirmed. That said, the fierce competition forces exporters to offer flexible payment options like open account which importers are well aware of.
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CAD, short for “Cash Against Documents”, is a payment method in which banks are used for intermediation in terms of payment and transfer of the export documents from the exporter to the importer. It’s also called Documents Against Payment (DAP).
In CAD, the exporter designates its bank (remitting bank) to forward export documents to the importer’s bank (collecting bank) with an instruction. According to the instruction in question, the collecting bank releases the documents to the importer when it makes the payment for the goods.
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Cash in advance, also called cash with order or advance payment, is exporters’ favourite payment term as it requires the importers to pay for the goods upfront, generally upon confirmation of the proforma invoice. Depending on the agreed terms, It may not be full payment of the total amount but a certain sum and the balance could be paid when the goods are ready for shipment.
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