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What is cash on delivery?

Ekaterina Zhukova
Ekaterina Zhukova
December 19, 2014
What is cash on delivery?

The concept of “cash on delivery” has two basic, similar meanings. In the first case, this is one of the methods of payment for mailing (cargo or parcel), and in the second, one of the options for mutual settlements between organizations when sending goods.

In more detail that such cash on delivery in each of these cases, also will be discussed further.

What is cash on delivery: basic values

Calculations by cash on delivery are made in the following cases:

  1. As payment by the addressee of the goods or parcels that were sent to him by mail. In this case, the person sending them, instructs the post office or the transport company to issue the parcel to the recipient only if he pays the declared value in full. The sender fills out a special form when sending material values ​​by cash on delivery and receives the amount sent by the recipient. Mail from this amount is retained only by the cost of the money transfer service.
  2. When sending medium-sized and not too expensive batches of any goods, as well as when calculating any economic organizations with citizens. At the same time, as in the first case, when delivering the goods to a transport company or a post office, the sender sets the condition for the delivery of the goods to the recipient in full payment of the designated amount by means of a cash on delivery. In this case, the addressee can make cash on delivery both in cash and by bank transfer (such can be guaranteed payment orders agreed by the bank, as well as checks). Cash on cash payments are credited to the bank accounts of enterprises or organizations. Material responsibility for the safety of the goods, which was sent by cash on delivery, assumes a transport company or a communications company.

Payment of goods by cash on delivery is very often used in retail and small wholesale online stores and other trade organizations that are engaged in mail order.

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