Cash in advance (CIA or CAD) is an international trade payment method in which the buyer pays for goods before the seller ships them. The seller receives full payment before releasing the goods, eliminating the seller’s risk of non-payment entirely. It is the most favorable payment term for the exporter and the least favorable for the importer, who bears all risk until the goods arrive.
When Cash in Advance Is Used
Cash in advance is common when: the exporter has limited trust in the importer’s creditworthiness, the buyer is new with no established trade history, the goods are custom-made and have limited resale value, or the importing country has political or currency risk that makes other payment methods impractical. It is also standard in small-value e-commerce transactions where the buyer pays online before shipment.
Cash in Advance vs. Other Payment Methods
The spectrum of international trade payment terms runs from most seller-favorable to most buyer-favorable: Cash in Advance → Letter of Credit → Documentary Collection → Open Account. Most established B2B trade relationships use open account terms (net 30/60/90), where the buyer pays after receiving goods — accepting the seller’s credit risk but enabling smoother trade flow. Cash in advance creates friction in buyer relationships but is appropriate when the risk of non-payment is material.