Cash on delivery (COD)
What is cash on delivery (COD)?
Cash on delivery, or COD, is a payment method where the customer pays the courier on receipt and the courier forwards the money to the shop. The shop ships before it is paid, pays a fee for the service, and carries the risk of a parcel refused at the door. It is still ordinary in Bulgaria, and it changes both when the cash arrives and how the sale is documented.
Example
A shop sends 100 orders of €60 with cash on delivery. Eight are refused at the door: €480 is never collected and the parcels come back, which at €4 out and €4 back is €64 in courier charges alone. The €5,520 that is collected also carries a cash-on-delivery fee; at an illustrative 1 per cent that is €55.20. The money reaches the account some days after delivery, not on the day of the order.
The same 100 orders paid by card are collected as they are placed. That is why shops offer both: cash on delivery brings the customers who will not pay online, and cards bring the revenue in first. The amounts are illustrative; the ratio between the two is visible in your own orders.
What lowers refusals is unglamorous: confirm the order before it ships, state a delivery date, and make sure the courier has a number that is answered. On expensive parcels some shops switch cash on delivery off, or take part of the amount up front.
Why it matters for a business
Cash on delivery moves three things: the cash cycle, the risk and the paperwork. Revenue arrives later and through the courier’s account. The refused parcel is your loss. And the documentation differs, because money collected by a licensed postal operator and forwarded as a postal money transfer is not receipted the way a card payment is — how a sale is recorded is settled with your accountant against the Bulgarian rules for recording sales.
So it is not a checkbox in the basket. The amount, whether the customer may inspect the goods, and who pays for delivery travel from the order to the shipping label, and the courier’s payouts are later reconciled against orders. We treat that as part of an online store build rather than a setting added at the end.
What to ask
- Which couriers and which services support cash on delivery: to an address, an office, a locker?
- Does the amount travel from the order to the shipping label without anyone retyping it?
- How are the courier’s payouts reconciled with orders, and who checks them?
- May the customer inspect or test the goods before paying, and who decides that?
- Can cash on delivery be switched off above a certain value, or for a first order?
- What document goes in the parcel, and what generates it?