CASH ON DELIVERY (COD)
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A payment term where goods are paid for at the time of delivery.
Summary
Cash on Delivery (COD) is a payment method where the buyer pays for goods or services at the moment they are delivered, rather than paying in advance. This arrangement protects buyers from paying for items they haven't received, while sellers retain ownership until payment is made. COD is commonly used in e-commerce, mail-order businesses, and situations where trust between buyer and seller is still being established. The delivery person or courier typically collects the payment on behalf of the seller.
Usage Context
Understanding COD is important when studying payment terms in sales transactions, risk management in business operations, and customer service policies. It's particularly relevant in discussions about cash flow management and credit risk mitigation.
Common Confusions
- Thinking COD means the seller ships without any guarantee of payment
- Confusing COD with credit terms or payment deferrals
- Believing COD always costs more than other payment methods
- Assuming COD orders can't be returned or exchanged
