Cash on Delivery (COD)

Cash on Delivery (COD) refers to a settlement method in which the buyer pays for the goods only when the goods are delivered to the buyer. In foreign trade, COD is usually used for small transactions, sample orders, or between long-term customers with high trust, and is especially common in cross-border e-commerce B2C or small B2B orders. Usage scenarios include: the buyer is unwilling to pay in advance, the seller offers flexible payment to promote the deal, or the logistics company collects payment on behalf of the seller. Precautions: 1) The seller bears the risk of the buyer refusing the goods or defaulting, so the buyer's credit should be assessed; 2) Logistics companies usually charge a collection fee, and the payment cycle is relatively long; 3) It is necessary to clarify whether the COD amount includes freight, tariffs, etc.; 4) It is best to stipulate in the contract how refusal of goods will be handled. Differences from other terms: COD is the opposite of T/T in advance; the former places risk on the seller, while the latter places it on the buyer. Compared with a letter of credit (L/C), COD has no bank credit guarantee and relies entirely on commercial credit. Unlike open account (O/A), COD requires payment upon delivery, while O/A allows deferred payment after delivery. Therefore, COD is suitable for low-value, high-trust transactions, while letters of credit or advance payment are recommended for high-value orders.