What is the difference between documents against payment and cash against documents?

Okay, so, Documents Against Payment (D/P) versus Cash Against Documents (CAD)… It’s all about getting paid, right? But how you get paid makes a world of difference. Both involve shipping stuff and getting money, but the timing and risk are totally different.

Think of it this way: D/P is like… lending a friend a book. You give it to someone else (the bank) to hold onto. They won’t give your friend the book (shipping documents – same difference, kinda) until they pay you back. So, with D/P, my bank is like that responsible friend – holding onto the goods (well, the paperwork for the goods) until the buyer coughs up the cash. This gives the buyer a little bit of time, which can be good or bad. Good because they might need a few days to shuffle things around, but bad because… what if they change their mind?! It’s happened. I once shipped a whole pallet of bespoke t-shirts D/P only to have the buyer suddenly “restructure” their business. Nightmare. Still, generally, it feels a little safer.

CAD, on the other hand? Pure adrenaline. Think一手交钱一手交货 – direct exchange, like buying something at a farmer’s market. Cash on the barrelhead. Boom, done. I’ve used CAD for smaller shipments, like when I sent a sample batch of handmade soaps to a small boutique. I got the money right away, which was awesome! But… there’s a bigger chance the buyer might back out before they even see the goods. What if they’re not happy with the shipping arrangements or something? You’re kinda at their mercy until the cash is in your hand. So, yeah, more risk with CAD.

So, which is better? Honestly, it depends. Who are you dealing with? How big is the order? How much do you trust them? It’s a bit of a gamble either way, isn’t it? D/P feels safer but slower; CAD is faster, but scarier. It’s like picking between two slightly dodgy-looking taxis – you just hope you get to your destination in one piece!