The importer pays for it for the goods that need to be obtained before receiving it to ensure the satisfaction of the transaction from both parties, the third party will accept the shipping and ownership documents for the exported goods, and there is no release of the product to the buyer until the payment is completed.
The Recipient of the CAD Contract
It helps ensure that exporters get their money on time, and at the same time, this also allows importers to get the goods they need for their business at any time.
Also read: CAD Trade and Payment Agreements
What are the Conditions?
- The exporter prepares the documents for the shipment as soon as the buyer makes the order.
- Send these documents to a financial institution to facilitate the transaction, and most of them are one of the well-known banks.
- The bank keeps the document until the shipment arrives.
- Pay the price of the goods upon receipt of the payment from the buyer.
- Handing over the documents to the importer, while the exporter receives money in exchange for the goods and products he sold.
Also read: Payment Methods of Import and Export
CAD
Once the requests is accepted by the international buyer and then prepare the necessary shipping documents required by the country of origin, the country of destination and the standard form that is part of these documents is the merchandise export form
And products, the export collection form, and other shipping documents are sent directly to the financial institution that the exporter uses and which is a mediator between the two parties.
Also read: A Comprehensive Illustration of Shipping Container
Who Pays for a CAD Transaction?
- The bank that helps facilitate this type of transaction charges a small fee for the service provided.
- Both parties benefit from a CAD contract, it is not uncommon to see them splitting the cost.
- The party responsible for the fees according to the original agreement is the person who pays the fees in full without any discussion.
- The complexities involved in international trade a lot of times, and the protection that CAD transactions provide to both parties, whether the exporter or the importer, the cost paid to the financial institution that acts as a broker is worth the expense.
Also read: Meanings of Shipping Terms
CAD Transaction Risk
Most of the risks involved in international trade for both parties are more beneficial to the importing party for the goods and products, especially when compared to letters of credit that are presented during those transactions, and the CAD transaction is less expensive and has no impact on the credit available to the importer, the seller is still some risks assume that the buyer may refuse delivery, in which case the exporter must absorb the additional cost, and these costs cover the need to return the goods to them.
CAD Transaction Financing Company
Banks provide CAD services, they may impose many higher fees than any other company in addition to that they may not have the experience, and the knowledge required to deal with this type of international transaction. These transactions are complex and may require a level of experience that many banks do not have and finance companies deal with this type of transaction on a daily basis, it is better equipped to deal with the complex paperwork that takes place during these transactions, in addition to that they have gained experience in international import and export, which will prove invaluable in ensuring the success of CAD transactions.
Also read: A Comprehensive Illustration of Shipping Container