COD (cash on delivery) payment terms: meaning, due date

COD (cash on delivery) at a glance

Type

Cash terms

Full amount due

Immediately

Also written

cash on delivery, collect on delivery

Example dates

What it means

COD (cash on delivery), also written cash on delivery or collect on delivery, is a cash term: payment is made when the goods are delivered, before or as the buyer takes possession. It is not trade credit, and there is no credit period to age. Net days are 0, so the full amount is due on the invoice date.

Three dates make the calendar clear. An invoice dated Thursday, Jan 15, 2026 has its full amount due Thursday, Jan 15, 2026. An invoice dated Friday, Feb 27, 2026 is due Friday, Feb 27, 2026. An invoice dated Friday, Dec 18, 2026 is due Friday, Dec 18, 2026. In each case the calendar days to due are 0, and none of the due dates falls on a weekend.

For AP, COD is a payment-at-delivery control point, not an item for a scheduled payment run. Match the invoice to the delivery at the point of receipt and clear the payment on the same date. The average days to pay for this term is 0; an open COD item on an aging report is a question to resolve, not a balance to carry forward.

When suppliers ask for it

Suppliers ask for COD when they want certainty at the point of handover. That can be a first order, a vendor with no credit account, a one-off purchase, or a delivery where the supplier or carrier will not release the goods without payment. Also written collect on delivery, it moves the payment moment to delivery rather than to a later invoice cycle.

AP teams see COD requests outside the normal invoice cycle: a site purchase, an urgent consumable, or a small order from a supplier who has not been set up for trade credit. The request may arrive as a note on the order or as a call from the receiving desk. Record the term on the vendor record and on the transaction so the invoice does not later look like a credit purchase.

Because net days are 0, a COD request is not a request for more time in the payment run. It is a request to have funds ready at delivery. Confirm the approver, the payment method and the receiving contact before the goods arrive. If the business cannot pay at delivery, change or decline the order before dispatch, not after the supplier is at the door.

Paying safely

Paying COD safely means treating the handover as a three-way check: supplier, goods and payment. Confirm the supplier's legal name and remit details against the vendor record before money leaves. At delivery, match the goods to the order and the invoice to the delivery receipt. Have the receiver sign and date the receipt, and attach the payment reference to the invoice image.

Clear the payment on the invoice date. Use the dates as a test: Thursday, Jan 15, 2026 is due Thursday, Jan 15, 2026; Friday, Feb 27, 2026 is due Friday, Feb 27, 2026; Friday, Dec 18, 2026 is due Friday, Dec 18, 2026. None of those due dates falls on a weekend, so no weekend roll applies. If the delivery is scheduled for a different day, resolve the mismatch before payment rather than keying a new due date.

Close the loop the same day. Record the payment against the invoice and the delivery receipt, and mark the vendor record so a later statement does not look unpaid. Paying a statement as well as the invoice is a common double payment when COD items stay on the statement as open. Paying a re-sent invoice twice is another; a supplier may resend the same invoice after the delivery payment has cleared. Match by invoice number, date and amount before releasing any second payment.

Where these payments go wrong

Keying the wrong term is the first failure. If a COD invoice is entered with a credit term, your ERP will carry a due date that does not belong to the transaction and the payment may drift into a scheduled run. Check the term on the vendor record and on the invoice before entry, then confirm that net days are 0 and the full amount is due on the invoice date.

Counting from the received date instead of the invoice date is the second. COD is due when goods are delivered, and the dates here have 0 calendar days to due from the invoice date: Thursday, Jan 15, 2026, Friday, Feb 27, 2026 and Friday, Dec 18, 2026 all fall due on the same date as the invoice. If the receiving date is used as the start, AP can create an off-ledger gap, pay after a reminder, or leave a cleared item showing as late.

Taking a discount after the window is a different error, but it appears around COD when a clerk copies terms from another vendor. COD has no discount percentage and no discount days; there is no discount to take and no window to miss. If a discount is deducted on a COD invoice, the supplier is underpaid at delivery and the balance becomes a collection item.

Paying a statement as well as the invoice and paying a re-sent invoice twice are the two repeat-payment patterns to test. A statement total can include COD invoices already settled at delivery, so reconcile line by line rather than paying the statement balance. A re-sent invoice can arrive with a new date or a new reference; match on the original invoice number, the delivery receipt and the payment record before paying again. The average days to pay for COD is 0, so any open COD item on an aging report is a question to clear.

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