Cash on delivery (COD) is a payment term under which the buyer pays for goods at the moment they are delivered, rather than paying in advance or on credit terms like net 30. The payment can be cash, card, or another accepted method collected at the point of handoff. COD sits between full prepayment and open credit, and it mainly shifts nonpayment risk away from the seller.
How it works
The seller ships or delivers the order without collecting money first. The carrier, driver, or the seller’s own delivery person collects payment on arrival, then remits it back to the seller (often minus a handling fee if a courier manages the collection). If the buyer refuses the goods or cannot pay, the order returns undelivered and the sale falls through.
Why it matters
COD lets you transact with new or unverified buyers without extending credit or waiting on a wire that may never arrive. It is common in markets where buyers are cautious about paying strangers upfront, and in wholesale relationships that have not yet earned formal credit terms. The tradeoff is real: you carry shipping and handling costs on orders that can be refused, and reconciling collected cash is slower than a card charge.
COD in B2B quoting on Shopify
When you send a quote, the payment term is part of what the buyer is agreeing to. If you offer COD, state it clearly on the quote alongside price, quantity, and any deposit. In practice, many Shopify B2B sellers reserve COD for smaller or local orders and steer larger or first-time deals toward prepayment or a checkout link, since collecting through native Shopify checkout gives you an instant record and no cash to reconcile. As a buyer relationship matures, you might graduate them from COD to net terms. For related terms, see the B2B quoting glossary.