What Is CAD Financing?

Cash Against Documents (CAD) is a form of financing that reduces transactional risk for exporters and importers. It’s used in scenarios where the importer is a new entity, or relatively unknown to the exporter, or is lacking in sufficient credit. CAD is initiated by the exporter/seller.

In CAD financing a third party, namely a bank or factor, provides a type of escrow service.

  • The exporter sends the shipping and title documents to the third party and receives a guarantee of payment with the condition that the importer may first inspect and approve of the goods shipped.
  • During the inspection process the exporter retains ownership of the goods.
  • After the importer approves of the goods, he initiates payment to the third party, who then pays the exporter.
  • After the payment is complete, the goods and title are released to the importer.

CAD mitigates the risk of cross-border transactions disputes that can be costly to resolve.

Banks may charge higher fees for CAD services and may lack the export-import expertise held by veteran factoring companies. Spearfish can facilitate your CAD deal, assist you in determining the right type of export-import solution and match you with the right provider – free of charge.

To learn more about CAD financing, book a phone consulation with us.

What is WIP (work-in-progress) Financing?

AR management, bundled with your factoring