Posted in Operations and Supply Chain Terms, Total Reads: 2646
Definition: COD (Cash on Delivery)
It is a delivery mechanism where the payment is collected from the buyer on delivery rather than collecting it in advance. This term is not used in B2B (Business to Business) transactions. It is used in B2C (Business to consumer) transactions where the recipient is getting the product/service from the 3rd party.
Here the business party appoints an agent for the delivery of the product/service. The recipient, i.e. the consumer, pays the amount to the agent on delivering the goods. The agent in turn keeps a certain percentage/fixed amount as a fee with himself and remits the rest to the business party.
This type of transaction is also called as “COLLECT ON DELIVERY”.