COD Part 1: What’s Wrong with Cash on Delivery?
Cash on Delivery, or Collect on Delivery, or COD as it is commonly abbreviated, is a valuable payment acceptance method for some suppliers to implement when managing customer payments. Suppliers may choose to provide certain customers with COD as their preferred payment option for its quick onboarding process, and its ability to offer smaller or riskier accounts with a path towards becoming credit customers. In this way, the customer receives the product they need to run their business, while the supplier maintains cash flow that is not dependant on the customer’s credit worthiness. Similarly, COD guarantees suppliers will receive payment; with no payment terms that must be agreed to, and with lower minimum order requirements, suppliers are typically more accepting of purchase orders that meet both of these conditions.
However, as this year’s call to work remotely, or to be socially distant if you do have to work on premises has taught us, providing payment at time of delivery isn’t always safe and it isn’t always possible.
COD carries with it several risks that have the potential to harm a supplier’s business. Here are 4 pain points in the COD collections process that are cause for concern for suppliers today:1. COD Impedes Cash Flow
There is a better way to manage COD customers that still provides the benefits of COD – quick onboarding, no credit risk, etc. – but removes the risky in-person interaction and automatically reconciles payments to a supplier’s bank account. We call it eCOD (Electronic Cash on Delivery) and I’ll explain it further in Part 2 of this blog series.
Tyler is a senior-year university student currently enrolled at the University of Guelph and is working towards completing a Bachelor of Commerce degree specializing in Marketing Management. While completing several co-op work terms as part of his degree, Tyler has gained practical experience in the fields of eCommerce, email marketing, and content curation. He enjoys writing blogs and utilizing his creative side to produce content that is both eye-catching and thought provoking to the receiver.
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