Cash on Delivery
Also called: COD
What is Cash on Delivery?
Cash on delivery, or COD, is payment collected when the goods reach the customer rather than at ordering. The money then travels back through the delivery partner before reaching the merchant.
Why Cash on Delivery matters
COD widens the customer base but carries a higher rejection rate, a cash handling risk and a delayed settlement. Each of those is a cost that rarely appears in the order-level margin.
Cash on Delivery formula
COD rejection rate % = Rejected COD orders ÷ Total COD orders × 100
Multiply by the cost of delivery and return to value the leakage.
How Cash on Delivery works in practice
Track COD rejection rate separately and reconcile remittances against delivered orders. Where rejections are high, a partial advance at ordering usually cuts them sharply.
Frequently asked questions
Rejections, return shipping, cash handling and delayed settlement all add cost that prepaid orders avoid.