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Finance & Payments

Cash on Delivery (COD)

Also known as: COD

Cash on delivery (COD) is a payment arrangement where the buyer pays for goods at the point they are delivered rather than in advance or on credit.

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COD removes credit risk for the supplier because payment is collected on delivery, while the buyer avoids paying before receiving the goods. It is common for new trading relationships, one-off purchases or buyers who have not been granted credit terms, and today often means an electronic payment on delivery rather than literal cash.

The trade-off is cash flow and administration: the buyer pays immediately instead of on net terms, and delivery and collection must be coordinated. As trust builds and a buyer passes credit checks, COD is frequently replaced by open account terms such as net 30.

Frequently asked questions

What is cash on delivery?
Cash on delivery (COD) is when the buyer pays for goods at the point of delivery, rather than in advance or on credit terms.
When is COD used?
For new relationships, one-off orders or buyers without approved credit terms — it protects the supplier from non-payment while assuring the buyer goods arrive before paying.

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