Cash Against Delivery (CAD) in a preferred means of conducting business amongst many businesses.

Advantages to the seller:

(a) Goods are in his effective (note the word 'effective') possession till drawee/buyer/importer pays for them;

(b) Since the bills are on D/P basis, no time is wasted. The bills are presented to the buyer at the first opportunity. The seller comes to know very early whether the drawee would pay or not. Warning signs, if at all they are to come, appear very early on his radar.

(c) The seller has a very experienced, reliable and professional banking system to work for him, acting on his precise instructions. Changes or deviations must have his prior approval.

(d) There are a clear and a definite set of rules (URC 522) to guide the collection process, and the expertise of the ICC to back it up. The entire transaction remains transparent to all parties concerned.

Disadvantages to the seller:

(a) There is no guarantee that the buyer will take delivery of the consignment. No agreement or contract can force a buyer to accept the consignment.

(b) If buyer wishes to play truant and delays taking delivery, it may lead to demurrages and other incidental costs, compromising seller’s bargaining power.

(c) Legal remedy for breach of contract can be long and a costly process.

(d) In case of failure of the buyer, the seller would either have to pay the cost of carriage for return of the goods, or find an alternate buyer at the same or a new destination – leading to additional costs.

Disadvantages to the buyer:

(a) Unless he has paid for the goods, he is unable to take possession and satisfy himself as to the correctness in terms of quality and quantity.

(b) Once payment has been made, he cannot reclaim the funds. Refund is possible only with the consent of the seller.

Mr. Rakesh Joshi

Joshi Enterprise

Manager, Joshi Enterprise
Dispur, India

Free Member, Joined :02/02/2007
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