Disadvantages of Cash on Delivery

1. Potential Problems with Cash Flow and Refusals to Pay:

Sellers must wait to get paid when COD is made available as an alternative to paying when ordering. For businesses, this can cause problems with cash flow. Most of the risk involved with sales is also transferred to the seller when goods are delivered on COD, and there is no assurance the seller will ever be paid. Customers can now decline cash on delivery, reducing sales and increasing return costs.

2. Additional Accounting Work:

With COD, the delivery person must frequently collect physical payments, store them securely, and then send them back to the business for processing. COD deliveries that accept cash, checks, and other offline payment methods require a significant amount of manual accounting work, which adds to the hazards of loss and error.

3. Possible Stock-level and Availability Difficulties:

Offering a COD option that enables customers to try on clothing and shoes for a limited period may cause a significant portion of the inventory to be out of stock. Another consumer might be let down if they wanted to order the same products. Customers may become upset and can decide to buy from another store if popular items are regularly out of stock.

4. More Expensive:

Courier firms charge an additional fee when using cash on delivery method. The seller finds it challenging to bear this expense.

5. Suspicious Orders:

Occasionally, someone may post false orders on cash on delivery with the incorrect address in an effort to cause trouble. Losses will result from processing such orders for delivery.