Cash On Delivery - COD

AAA

DEFINITION of 'Cash On Delivery - COD'

A type of transaction in which payment for a good is made at the time of delivery. If the purchaser does not make payment when the good is delivered, then the good will be returned to the seller.

Payment can be made by cash, certified check or money order, depending on what is stipulated in the shipping contract.

VIDEO

Loading the player...

BREAKING DOWN 'Cash On Delivery - COD'

This type of transaction is usually done through a shipping company and allows both the seller and the buyer of the product to minimize the risk of fraud or default. COD allows the purchaser to pay at the time of delivery instead of having to pay upfront. Payment is made to the shipping company, and the shipping company then relays the payment back to the seller.

RELATED TERMS
  1. Uniform Bill Of Lading

    An agreement between an exporter and a carrier regarding property ...
  2. Cash Transaction

    A transaction that is settled with cash on the same day as the ...
  3. Default

    1. The failure to promptly pay interest or principal when due. ...
  4. Transaction

    1. An agreement between a buyer and a seller to exchange goods, ...
  5. Certified Check

    A type of check where the issuing bank guarantees the recipient ...
  6. Transaction Risk

    The exchange rate risk associated with the time delay between ...
Related Articles
  1. Economics

    Explaining Cash On Delivery

    Cash on delivery, also referred to as COD, is a method of shipping goods to buyers who do not have credit terms with the seller.
  2. Economics

    Understanding Switching Costs

    Consumers incur switching costs when they receive a monetary or other type of penalty for changing a supplier, brand or product.
  3. Investing Basics

    What's a Price-Taker?

    Price-taker is an economic term describing a market participant who has no effect on overall market activity.
  4. Economics

    Explaining Replacement Cost

    The replacement cost is the cost you’d have to pay to replace an asset with a similar asset at the present time and value.
  5. Term

    What are Articles of Association?

    Articles of association are a document that specifies the regulations for a company’s operations.
  6. Investing Basics

    What Does Window Dressing Mean?

    Window dressing is the actions taken close to the end of a reporting period by managers to try and make their financial numbers look better.
  7. Economics

    What Does Business-to-Business Mean?

    The term business-to-business refers to transactions or communication that takes place between two or more businesses.
  8. Economics

    What are Barriers to Entry?

    A barrier to entry is any obstacle that restricts or impedes a company’s efforts to enter an industry.
  9. Economics

    Understanding Management by Objectives

    Management by objectives is a process in which a manager and an employee agree on specific performance goals and then develop a plan to reach those goals.
  10. Economics

    What Does Going Concern Mean?

    Going concern is a concept used in business and accounting to describe the fiscal health of a company.
RELATED FAQS
  1. What's the difference between cash-on-delivery differ and delivery against payment?

    Cash on delivery and delivery versus payment describe different procedures and timing of payments. Cash on delivery describes ... Read Full Answer >>
  2. When should I send my master Bill of Lading?

    A master bill of lading should be sent when a carrier leaves a shipping terminal or dock to ship goods to a receiver or shipping ... Read Full Answer >>
  3. Does cash-on-delivery aid produce better results than a loan?

    Very little empirical evidence has been collected that can be used to directly compare the results of cash on delivery, or ... Read Full Answer >>
  4. Does identity theft or credit card fraud also occur with cash-on-delivery?

    While cash on delivery (COD) is a system intended to typically reduce risk and fraud, as with any type of financial transaction ... Read Full Answer >>
  5. Does the consumer or seller benefit more from a cash-on-delivery transaction?

    Cash-on-delivery (COD) systems reduce the risk of fraud or default for both the buyer and the seller, but it would be impossible ... Read Full Answer >>
  6. How can I calculate funds from operation in Excel?

    In general, the terms "work in progress" and "work in process" are used interchangeably to refer to products midway through ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  2. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  3. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  4. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  5. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  6. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!