For a first-time buyer of Egyptian pulses, the payment term on the table can feel like the riskiest part of the deal — money is leaving before the goods arrive, and the goods are leaving before the money is confirmed. In practice, international trade has settled on a small set of payment mechanisms precisely to manage that risk on both sides. This guide explains the three most common terms in Egyptian agri-export — LC, CAD and TT — and the document flow that keeps a deal on track.
Letter of Credit (LC): The Bank Stands Behind the Buyer
A Letter of Credit is issued by the buyer's bank and is a formal promise to pay the seller once specific documents — typically the Bill of Lading, Commercial Invoice, Packing List and Certificate of Origin — are presented, proving the goods were shipped exactly as agreed. Because the paying party is a bank rather than the individual buyer, an LC substantially reduces the seller's exposure to non-payment and is the most common structure between parties without prior trading history or in larger transactions. The tradeoff is process: an LC takes time to open, involves bank fees on both sides, and requires the shipping documents to match the LC's terms exactly — a mismatch can delay payment until corrected.
Cash Against Documents (CAD): A Middle Ground
Under CAD, the exporter ships the goods and routes the shipping documents through the banking system rather than sending them directly to the buyer. The buyer pays the agreed amount to release those documents, which are required to clear the cargo at destination. This gives the seller more protection than shipping on open account, without the cost and formality of opening a full LC — it is often used once a buyer has demonstrated some reliability, or for order sizes where an LC's fixed costs are disproportionate.
Telegraphic Transfer (TT): Direct and Flexible
TT — a direct bank-to-bank wire transfer — is the most flexible mechanism and is commonly structured in agricultural export as a deposit paid before production or shipment, with the balance paid before or against the shipping documents. TT is fastest and cheapest in terms of banking fees, but it carries more reliance on trust between the parties since it does not have the document-triggered guarantee mechanism of an LC. It is frequently used once a buyer and supplier have built a trading relationship, or for smaller, lower-risk order sizes.
| Term | Who bears more risk upfront | Typical fit |
|---|---|---|
| LC | Risk shared via bank guarantee | First-time or larger deals, no trading history |
| CAD | Buyer pays to release documents | Some trading history, moderate order size |
| TT | Depends on deposit/balance structure agreed | Established relationships or smaller orders |
Every payment term starts from the same document: the proforma invoice. It states product, grade, quantity, packing, price, Incoterm, payment terms and shipment window, and it is the reference both sides check the final shipment against.
The Proforma-Invoice Flow
Once an RFQ is answered with a firm offer, the exporter issues a proforma invoice — the formal quotation document confirming everything the buyer needs before committing: product and grade, quantity, packing, price, Incoterm, agreed payment term and estimated shipment window. This document is typically what a buyer's bank requires to open an LC or process a TT, and it becomes the reference point both sides check the eventual Commercial Invoice and shipping documents against. A clear, complete proforma invoice at the start of the deal reduces the chance of disputes over specification or terms later.
Human-in-the-Loop, Not Automated Checkout
Because payment terms interact with banking relationships, order size, destination country regulations and the specific commodity, there is no single correct answer for every buyer. Admiral Agro's export process is built around a person confirming terms directly with each buyer — reviewing the proforma invoice, agreeing the payment structure, and adjusting for the realities of a first-time relationship versus a repeat program. First-time buyers should raise payment-term questions directly with the export team rather than assuming a default; see the export process page for how a typical deal moves from RFQ to shipment.
Frequently Asked Questions
What is a Letter of Credit (LC)?
A payment guarantee from the buyer's bank, paying the seller once shipping documents proving the goods were shipped as agreed are presented. Reduces seller risk in new relationships.
What does Cash Against Documents (CAD) mean?
The buyer pays through the banking system to release the shipping documents needed to claim the cargo — more protection than open terms, less process than an LC.
What is TT and when is it used?
Telegraphic Transfer, a direct bank wire, often structured as deposit plus balance. Common once a trading relationship is established.
What is a proforma invoice and why does it matter?
The exporter's formal offer confirming product, price, terms and shipment window — the reference document for the deal and often required to open an LC or process a TT.
Which payment term should a first-time buyer choose?
It depends on order size and banking relationships. Discuss options directly with the export team for guidance suited to your order.
Discuss payment terms for your order
Send product, quantity and destination for a proforma invoice and a conversation about the payment structure that fits your deal.
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