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C.O.D = Cash On Delivery
What is COD (Cash on Delivery)?
Cash on delivery or COD is a popular form of payment for purchases made online. COD allows buyers to make payments for their purchases via cash or card at the time of delivery of their orders. Research suggests that the customers are confident about their purchases made via the COD model. It also increases the probability of sales for eCommerce sellers.
Cash on delivery (COD), sometimes called collect on delivery or cash on demand,[1] is the sale of goods by mail order where payment is made on delivery rather than in advance. If the goods are not paid for, they are returned to the retailer.[2] Originally, the term applied only to payment by cash but as other forms of payment have become more common, the word "cash" has sometimes been replaced with the word "collect" to include transactions by checks, money orders, credit cards or debit cards.
Advantages and disadvantages for retailers:
The advantages of COD for online or mail order retailers are:The customer does not need to own a credit card to purchase
Impulse purchases may increase as payment is not due at the time of ordering
The credibility of retailers may be increased because the consumer only has to pay when the item is delivered
The principal disadvantage for retailers is that many more orders will be returned as buyers are less committed to the purchase than if they had paid in advance.
Limits:
Most operators impose a limit on the amount of money that can be collected per delivery or per day using COD services. Limits may be higher for non-cash payments. Canada Post, for instance, applies a limit of C$1000 for cash, but C$5,000 for payment by check or money order.[3]
Payment on Delivery:
COD orders instruct the delivery person to collect the amount due before completing the delivery. This instruction, generally included on a package tag, helps prevent unpaid merchandise being delivered without collection by mistake. These transactions may require COD handling charges. Take this into account when considering the cost of a business purchase or setting prices for goods.
Cash Flow Perk:
For a business owner or entrepreneur, requiring cash on delivery helps to protect your cash flow from slow-paying accounts. For established clients who pay promptly, a net-30 arrangement may work well. For accounts that tend to go into arrears, instead of declining orders from tardy clients, you could require cash on delivery for all future transactions.
Source By: Wikipedia
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