Cash Against Documents
A cash against documents (CAD) transaction is one in which the seller retains ownership of the product until payment is made. The documents that specify the terms of the transaction are held by an intermediary, most often a bank, agreeable to both the buyer and seller. Once payment is remitted, the bank releases the documents showing that the buyer can take ownership of the product. CAD transactions are most often used for international transactions in which an open trade account is not possible because the buyer is unfamiliar to the seller or the buyer’s credit standing may not meet the sellers criteria.