Sometimes when orders are made for the delivery of goods at a person’s residence or place of business, they can choose to only pay once the goods have been delivered.
Payment by COD (Cash On Delivery) is an option that older Americans are likely more familiar with than younger Americans, but it still takes place. In this payment arrangement, a customer can wait until the goods have been delivered before actually paying for them.
They payment is made to the company who transported and delivered the merchandise, who takes a fee for the service and pays the balance to the company who sold the product to the customer. This can be done electronically at the point of delivery. Increasingly, people and businesses have become more comfortable doing business online and ordering goods from around the world.
Because of the importance of reviews and user-ratings to these companies, buyers feel that they have a reliable way to find trustworthy companies and to at least tarnish a company’s reputation if the goods are not delivered as promised. Due to such developments, CODs are not used as much anymore on the retail side.
If companies have to order large amounts of inventory from companies they are not familiar with, COD may be the least risky way to go about it.