Glossary term
Cash Against Documents
A payment arrangement where shipping documents are released to the buyer only against payment.
The seller ships, then routes the documents through a bank which releases them to the buyer only on payment. Because a negotiable bill of lading controls the goods, withholding the document withholds the cargo.
It is weaker than a letter of credit: no bank guarantees payment, so if the buyer simply refuses, the seller is left with goods at a foreign port. Also called documents against payment.