Cash on Delivery (COD)
Candlefocus EditorCOD transactions are typically conducted in one of three ways: with cash, cheque, or money order. Customers may opt to pay with cash if the delivery is done in person, with cheques or money order if the delivery person is not able to accept cash. The method of payment for COD orders generally depends on the respective parties (customer and seller) agreeing upon a payment arrangement that suits their needs.
For sellers, COD transactions offer the benefit of receiving payment, minus the associated transaction fees, upon delivery. Additionally, COD shipping reduces the chance of sellers incurring the cost of failed sales due to an inability to collect funds. By opting for COD shipping, customers also benefit from having more time to make payment as they are not required to part with the money before delivery; this means that customers have time to save or source collection funds to pay the delivery person.
In terms of accounting, companies need to account for COD transactions to ensure the accuracy of the company’s financials. To do this, companies should make sure that COD transaction types are noted on their accounts and tax returns, alongside their regular income. They should also ensure that the delivery personnel collect proof of payment and make a record of the transaction for their records.
In conclusion, Cash on Delivery is a simple and convenient payment method for customers who need some extra time to save and make a full payment. It is also convenient for sellers as they receive payment up front. Companies should be aware of the implications of COD transactions on their bookkeeping and accounts so they can accurately track the incoming cash flow.