Cashew payment terms usually fall into four groups: T/T in advance, a T/T deposit with the balance against copy documents, cash against documents through the banks, and a letter of credit. Each moves risk between buyer and seller in a different way. Agree the method, the timing and the exact documents that trigger payment in the contract, before the goods are produced.
Which payment methods are used in the cashew trade?
A cashew sale has three moments where money can change hands: when the contract is signed, when the goods are shipped and when the buyer takes the documents that give control of the goods. Every payment method is a choice about which of those moments carries how much of the price.
- T/T in advance — the buyer pays before production or shipment. Simple and cheap, but all the risk sits with the buyer.
- T/T deposit and balance — a deposit at contract, the balance against a scan of the bill of lading and other documents.
- Cash against documents (CAD) — the seller’s bank sends the original documents to the buyer’s bank, which releases them only against payment.
- Letter of credit (L/C) — the buyer’s bank undertakes to pay if the seller presents documents that comply with the credit.
How do the methods compare?
| Method | Buyer’s risk | Seller’s risk | Bank cost | Speed |
|---|---|---|---|---|
| T/T in advance | High | Low | Low | Fast |
| T/T deposit + balance against copy documents | Medium | Medium | Low | Fast |
| Cash against documents | Low to medium | Medium: the buyer may refuse the documents | Medium | Medium |
| Letter of credit at sight | Low | Low, if documents comply | High | Slower |
There is no single right answer. Buyers with a long relationship often move from L/C to T/T as trust grows; new buyers and new suppliers usually start somewhere in the middle.
How does a T/T deposit and balance work?
This is the most common structure for container orders. The buyer pays a deposit when the contract is signed, which secures the production slot and the raw material. After loading, the seller sends scans of the bill of lading, invoice, packing list and certificate of analysis; the buyer pays the balance and the seller releases the original documents or a telex release.
- Write the deposit as a percentage and the date it is due.
- List the documents whose copies trigger the balance.
- State the deadline for the balance — for example within a set number of days of receiving the copies.
- Say how the originals are released — courier, telex release or express bill of lading.
How does cash against documents work?
Under cash against documents, also called documents against payment, the seller ships the goods and hands the original documents to its bank. That bank sends them to the buyer’s bank, which releases them to the buyer only when the buyer pays. Collections are usually handled under the ICC’s Uniform Rules for Collections.
The buyer does not pay until the goods are on the water and the documents have arrived. The seller’s risk is that the buyer refuses the documents — for example after a market fall — and the goods arrive at a foreign port with no one to collect them. For that reason sellers often combine CAD with a deposit.
When is a letter of credit worth it?
A letter of credit replaces the buyer’s promise with a bank’s. If the seller presents documents that comply with the credit, the bank pays. Under UCP 600 the bank has a maximum of five banking days after presentation to decide whether the documents comply.
The weak point is the documents themselves. A spelling difference, a late shipment date or a missing certificate makes the presentation discrepant, and the bank can refuse to pay until the buyer waives the discrepancy. Keep the L/C terms identical to the contract and ask your supplier to check the draft credit before it is issued.
An L/C is only as good as its wording. Ask the seller to review a draft before you open it: a requirement the seller cannot meet — a document that does not exist in Vietnam, or a shipment date that leaves no margin — costs both sides time and amendment fees.
How do payment terms interact with the Incoterm?
Under FOB, the buyer books the ship and the bill of lading is issued by the buyer’s carrier or forwarder, so the buyer has more control over the documents. Under CFR or CIF, the seller books the freight and holds the bill of lading until payment. Choose the Incoterm and the payment method together — see FOB vs CIF explained — and list the documents for each in the contract, as described in the cashew purchase contract guide.
The documents themselves — bill of lading, certificate of origin, phytosanitary certificate and certificate of analysis — are explained in export documentation for cashew imports.
How do you protect a payment?
Changed bank details arriving by email are a well-known fraud pattern in international trade. A two-minute phone call to a known number prevents most of it.
SVC confirms the payment terms for each order in the proforma invoice and the contract. If you ever receive an email saying SVC’s bank details have changed, call us on a number you already have before paying.
Is a deposit normal for a first order?
Yes. A deposit at contract is common for container orders, because the seller buys raw material and books production against your order.
Does an L/C protect me against poor quality?
Only indirectly. The bank checks documents, not goods. Make the certificate of analysis or an inspection certificate a required document if quality protection matters to you.
Can payment terms change after the first orders?
Often they do. As both sides build a record, many buyers move from L/C to deposit and balance, which is cheaper and faster.
Want to discuss terms for your next container? Request a quotation →
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