Cash before delivery (Cbd)

Cash before Delivery (CBD), also known as Cash in Advance or Prepayment, is a trade payment term in which the buyer is required to make full payment for goods or services before the seller initiates shipment or delivery. CBD provides maximum protection for the seller — eliminating all credit risk by ensuring payment is received before goods change hands — but it places the maximum risk and financing burden on the buyer, who must pay upfront without certainty of receiving the goods as specified. CBD terms are typically used in international and domestic trade when: the seller has significant concerns about the buyer's creditworthiness, the transaction involves customised or special-order goods that cannot be easily resold to other buyers, the seller operates in a cash-constrained environment and cannot extend credit, or the relationship is new with no established credit history between the parties. For Indian exporters selling to new international buyers in higher-risk markets, CBD terms (or partial prepayment with the balance on delivery) provide protection against payment default risk. In contrast, established buyer-seller relationships in India typically use open account terms (payment 30-90 days after delivery) or documentary credit (Letter of Credit) arrangements. For investors analysing Indian trading companies and exporters, the mix of payment terms used — particularly the proportion of CBD versus credit sales — provides insight into the company's negotiating power, customer relationships, and working capital management efficiency.