CASH AGAINST

DOCUMENTS
(CAD)

GROUP 4
 1
1.1 DEFINITION
1.2 PURPOSE OF CAD

NGUYEN TRAN QUYNH NHU

1.1 DEFINITION
Cash against documents (CAD) is a payment
method in which the importer basing on the
agreement of sale requires the exporter’s bank to
open one trust account to pay for the exporter upon
the exporter’s presentment of documents that meets
the conditions stipulated in the agreement.

Notion:
Typically, CAD is when an exporter (seller or vendor)
instructs his bank to release shipping documents to the
importer upon the full payment of shipment. After
payment, the importer receives the documents.
 1.2 PURPOSE OF CAD
1. Its purpose is for the vendor to get the amount owed by a customer from a bank against delivery of
documents (invoices, bill of lading...etc.).

2. Documents are only delivered to the customer upon payment or acceptance of the draft. In this last case,
the draft can be guaranteed by a bank, the bank gives suppliers a guarantee significantly higher pay.

3. Obtain a document that allows the buyer to take possession of the goods and clear the shipment at
customs.
 2

2.1 PAYMENT PROCESS

2.2 RIGHTS AND OBLIGATIONS OF PARTICIPANTS

NGUYEN THI ANH THU

2.1 PAYMENT PROCESS OF CAD
1. Open a trust account with balance 100% of
contract value.

2. Inform about the trust account and

requirements

3. Deliver goods subject to the agreement

4. Present documents

5. Check documents under the memoradum.

6. Transfer the documents àn strikes a balance

of the trust account.
 2.2 RIGHTS AND OBLIGATION OF PARTICIPANTS
FOR IMPORTER FOR EXPORTER

● Ask the bank to open a trust account. The ● Receive the payment.
account balance is equal to 100% of the
Rights contract value to pay the exporter.
● If the importer fails to fulfill the
● Importer must fulfill the obligation to payment obligation, the exporter has
pay thoroughly to the seller (exporter). the right to request the importer’s bank
● The importer will pay the exporter in to return the delivery documents, and
then the exporter can sell the goods to
advance an amount from 10% to 30% of
another one.
contract value.
● After the bank notifies that it has ● In the above case, the exporter can also
received the documents from the seller, request to re-export the consignment to
Obligations the buyer is obliged to pay the remaining
another country or return it to the
exporting country.
money to the bank to receive the delivery
documents.
2.2 RIGHTS AND OBLIGATION OF PARTICIPANTS
2.2 RIGHTS AND OBLIGATION OF PARTICIPANTS
IMPORTER’S BANK EXPORTER’S BANK

Rights ● Receive the payment intermediary charge.

● Finance importers to conduct the ● Finance exporters to conduct the

international trade. international trade.
● Check the importer payment documents. ● Check the export payment documents as
● Transfer money to the deposit account. At required in the memorandum. If payment
Obligations the same time, the bank will notify the DESCRIPCIÓN
documents are appropriate, the payment is
exporter about the deposit account that has credited to the exporter’s account and
started operating through the exporter’s debited to the importer’s escrow account.
bank. ● The bank will forward the documents to
the importer through the importer’s bank,
and then the importer picks up the goods.
 3
3.1 DOCUMENTS OF CAD METHODS
3.2 CONDITIONS APPLY

BUI HUY CUONG

 3.1 DOCUMENTS OF CAD METHODS

Certificate of quality Bill of lading

1 2 3 4 5
Letter of confirmation on Certificate of Copy of Commercial invoice
shipping documents issued by weight/quantity confirmed by Representative of
Representative of the buyer in the buyer in import country
import country
3.2 CONDITIONS APPLY
1. Importer and exporter have a good
relationship and trust each other.
Especially, the importer must have a lot
of confidence in the exporter.

2. Applied in the purchase and sale of

scarce items.

3. Applied instant payment method.

4. The importer has a representative in

exporting country to supervise the
delivery process.
 4

4.1 ADVANTAGES & DISVANTAGES

4.2 HOW TO IMPROVE CAD METHOD?

HUYNH AN
4.1 ADVANTAGES & DISVANTAGES
ADVANTAGES

FOR IMPORTER FOR EXPORTER

● The process is simplier than ● Exporter certainly get money

documentary credit method. quicly and the procedure is
Importer may control the complicated.
quality of the goods. ● No need to worry about losing
their goods.
● Low cost (due to the simplier
payment method)

1. Lower complexity and cost (easier both for seller and buyer)
2. Buyer’s process for buyer and seller, as bank intervention is minimal.
3. Buyer’s credit lines are not impacted.
4.1 ADVANTAGES & DISVANTAGES
DISVANTAGES
For importer For exporter

1. Importers must have their representative in the 1. Importers may control the quality tightly.
seller’s country to closely monitor delivery
process, to advoid sellers presenting documents not 2. Exporters are unable to be paid if documents do
in accordance with actual delivery of goods. not comply with regulationsin the memorandum.

3. Issurance of documents to the buyer without

payment or without acceptance of a draft.
2. Importers must open a trust account and sign a
memorandom at the exporter’s bank.
4. Refusal odd the buyer to take possesion of
documents and goods (in this case the seller is not
paid and find himself with the material located in
the country of the buyer).
4.2 HOW TO IMPROVE CAD METHOD?

1 2 3 4 5

Give Send the Set the period for

specific original payment from a
Refer to the Ship by sea and
instructions documents to generator which
ICC Rules 522 label the B/L to
to the the bank and is controlled
presenting order the bank
never directly (Eg: Issurance of B/L)
bank to the buyer
THANKS FOR LISTENING!