What Does The Abbreviation Cod Mean?

The definition of the term COD is cash on delivery or collects on delivery

. The initial meaning of the abbreviation is cash on delivery. However, now delivery services possess the capability to remotely process check, debit card, and credit card transactions. When the acceptable forms of payment began to include more than cash, the term collect on delivery gained favor.

With a collect on delivery transaction, the payment for a service or a product is made upon delivery, not before. However, this term is usually applied to purchases in third party transactions as the payments are taken by the delivery company rather than the seller. The delivery company charges a fee for collecting payment, and forwards the balance to the seller. These fees are commonly referred to as shipping and handling fees.

Many businesses do not use collect on delivery anymore. These transactions made more sense when companies delivered their own products. These days, businesses like UPS and Federal Express have made it cheaper to not deliver your own goods.

But, companies whose business model is to deliver their own products still use COD.

A prime example of this is pizza companies. Their business model is based on delivering their products and accepting payment when the product has reached the destination.

Delivery companies that are looking to remain competitive are offering more services. COD is one of these services, but not many of their clients are choosing it. Credit card fraud and worthless checks cost companies a lot of money. Because of this, collect on delivery services are not as worthwhile. It demands a large leap of faith on the part of the seller to hope that payment will be tendered for the services rendered or the goods received.

Consumers repeatedly point to trust as a determining factor as to which company they choose to do business with. Unfortunately, businesses are finding that they cannot always trust their customers. By not offering collect of delivery for their products, businesses are protecting themselves from what they perceive to be an untrustworthy general public.

In spite of this perception, however, many courier services still offer collect on delivery. The call for these services is no longer as loud, but it still has limited availability. So long as there still is a demand for collect on delivery, then there will be some delivery companies who will offer this service as a way to distinguish themselves from their competition.

by: Chris Ellis

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