What is COD, and How Exactly Does it Work?

Cash on delivery is a system where the customer transfers funds to the business only after they have received the product. It is worth noting that this form of payment generally holds suitable for non-perishable goods. That said, here’s a step-by-step breakdown of the backed process involved- 

1. First, a customer places an order online via a catalogue made available by the business on a cash on delivery shopping website. 

2. Next, once the customer receives the shipment, they may choose between paying immediately or, in some cases paying within a stipulated time frame in case they decide to keep the item. 

3. In the cash on delivery shopping business, if the customer decides not to keep the item, the item is returned, and the expenses involved in logistics are borne by the organisation.

4. However, if the customer is happy with their products and decides to keep them, they will pay for them. 

These steps ideally hold true in case the customer opts to shop from cash on delivery shopping apps as well. 

Is Cash On Delivery a Good or Bad Thing?

Although something being good or bad is a matter of perspective, it certainly helps to assess its pros and cons. If you are a business considering shifting into a cash-on-delivery shopping model, then here are a few sets of pros and cons to help you decide –

Advantages of cash on delivery shopping

• The COD method is the best for consumers who want to try new products but are afraid of risks. As in this, they can try products from new businesses and pay for them only when they receive the order and are satisfied with them. Hence, for small businesses looking to make an impression, COD is definitely one way to go.

• One more perk with cash on delivery shopping method is that customers can make multiple orders and then pay for the ones they want to keep. For example, if a customer is confused about the quality of two products, they can order both and see which one is better when delivered.

• There is no possibility of online payment fraud in the COD method. Although the likeliness of online fraud happening in legitimate businesses is low, it might happen in some of the new businesses.

• The COD method would lead to an improved customer experience overall, as they get a better sense of your offering. Hence, placing the business in a position where more and more people will know about it.

• Cash on delivery shopping method frees the customer from electronic payment methods. So even if a person is living in a rural area and doesn’t have a credit or a debit card, they can buy products from the online shop. 

Disadvantages of cash on delivery shopping

• If multiple customers choose to purchase items in bulk for the sake of trying and choosing a perfect product, then your business will run low on inventory. And if the customer decides not to keep them, the chances are that you will lose the customer who is willing to buy the product because you are out of stock.

• This pseudo stockout may create problems for other newer customers looking to purchase your product.

• Cash on delivery shopping is a definite risk for sellers, as they usually tend to send goods without the guarantee that they’ll be paid for them. 

• Cash on delivery shopping may also create issues with cash flow. That is, there tends to be a delay in receiving the cash that the business could have potentially gotten and invested.

Cash on Delivery Shopping Sites in India

There are several sites in India that offer the COD method as a way of payment. And we have compiled a list of significant cash on delivery shopping sites in India where you can try selling your products – 

1. Flipkart
2. Amazon
3. Myntra
4. Ajio
5. Bigbasket
6. Meesho

This list is not exhaustive but rather indicates that it is still a popular mode of payment.

Final Thoughts 

Cash on delivery shopping allows the customers to purchase the products of their liking without the fear of getting frauded by an online company. Now you can buy a product that caught your eye while scrolling through Instagram or Facebook and pay for it when the delivery is done. It saves you the risk while giving you a chance to bring the accessories you like to your home.

FAQs

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The advent of digitization has somewhat supplanted cash payment. However, cash circulation continues to increase in volume. Therefore, the focus of a business should be to have a defined cash flow management plan with key deliverables defined and leverage a payment system for online transactions.

Dos – How to Manage Cash Flow Better

Let’s explore a few steps that you can take to improve cash flow management,

• Creating a plan and sticking to it 

Study your cash flow to identify patterns to help you design a cash flow plan, i.e., when and how much cash flows in and out. Once formulated, you should stick to the plan – from sales order to customer payment recovery and from purchase order to payments.

• Have a financial schedule/calendar

Having a financial calendar can help execute a cash flow plan. The payment time can be scheduled, while accrual reminders can be sent on time. Subscriptions, monthly dues, and bills can also be scheduled so that you don’t face any late payment charges unnecessarily.

• Take advantage of technology 

The use of technology can help you avoid the usual perils of cash flow management. Accounting software can make a difference in your cash flow management for record-keeping and other operational assistance. Along with this, you can opt for PayU Priority Settlements for cash flow management. By integrating the PayU Priority Settlements, you get greater cash flow control, an auto-reconciliation feature, and flexible and instant payment settlements without hassle.

• Following up 

Following the financial calendar and not following up on payments may lead to defaults and delays in cash flow. Moreover, it is not just the payments recovery that needs a follow-up. You can also use a payment system to guide customers on terms of payments, due dates, etc. 

Don’ts – Things To Avoid In Cash Flow Management

Here are a few things to avoid to manage cash flow better:

• Not raising invoices on time 

Customers often pay invoices as per the credit period. Any delay in raising the invoice can lead to a subsequent delay in payment release, thus disrupting the cash inflow.

An invoice should be raised after fulfilling the agreed milestone(s). And once you raise the invoice, you can ensure that the customer gets all payment mode options with PayU, be it Credit Cards, Debit Cards, Net Banking, EMIs, BNPL, QR, UPI, or Wallets. 

• No emergency fund 

Contingencies can occur at any time, and businesses go through lean phases now and then. A portion of the business payments received should be set aside for emergencies to ensure that you can make a cash or banking payment even when business is slow.

• Not delegating 

A well-run business always deploys dedicated personnel in key positions. With various operating, investing, and financial activities like raising invoices, customer communication, recovery, liquidity investment, processing payment orders, etc., delegation within the business can ensure each sub-processes functions smoothly and with synergy.

• Not communicating 

The various functions within the business should be in constant communication regarding the cash flow position. Expected delays in receipts, potential cash crunch impacting business payments, and budget vs. actual comparisons are some of the things that should be discussed and communicated among relevant stakeholders to avoid misunderstandings or delays. 

While you follow the aforementioned tips to manage your cash flow better but there’s another way to manage it easily without facing the daily cash crunch. Yes, with PayU Priority Settlements, it is easy to keep the cash flow going & accelerate growth at every step.

Conclusion

In today’s digital age, payment and settlement systems have streamlined cash flow management for small and medium enterprises and even large e-commerce marketplaces. Besides, with smart checkout solutions and no-code solutions, PayU further diversifies the options you can have to accept payments. Similarly, payment disbursals are made easy by PayU with automated customer, vendor and aggregator payment solutions. Thus, when it comes to payments as a service and other cash management solutions, an association with PayU can make your business operations and cash flow hassle-free for your customers and your team. 

Also read: How To Boost Your Cash Flow

Frequently Asked Questions

The post 8 Dos And Don’ts For Better Cash Flow Management appeared first on PayU Blog.

What is Priority Settlements?

Priority Settlements is a PayU product that solves the cash flow problems of your business. Get your online customer payments instantly & run your business 24×7.

Why Do You Need It?

As the payment settlement process takes time, it’s difficult to receive your online collections instantly. Here are a few problems that PayU Priority Settlement mainly solves for your business while reducing the payment settlement time:

• Making timely payments
• Needing cashflow to meet capital expenses
• Providing instant refunds to your customers

How Does it Work?

Once a customer pays you, the money is deducted from their account instantly. Money moves from your customer’s bank to your bank via the payment gateway. With PayU Priority Settlements, these customer payments come to your bank account in just 15 minutes.

Know more about priority settlements in this video.

The post Boost Cash Flow for Your Business with Priority Settlements by PayU! appeared first on PayU Blog.

Therefore, you have enough money in your bank account that can be utilised to manage your daily activities, amend your marketing strategies and leverage new opportunities to reach out to customers, faster and conveniently.

Read on to know more about why it is a must to have PayU’s Same Day Settlement feature enabled for your business.

Re-invest More with the Improved Cash Flow

As mentioned above, PayU’s Same Day Settlement feature will help you improve your cash flow and thus help you in managing your working capital effectively. It will ensure your peace of mind that the money you have earned is already in your bank account and available for expenses and investing more.

An agile way of working will help you grow your business manifold and create a strong brand image in front of customers.

Be More Productive

After partnering with PayU, you will be able to settle your accounts faster with the vendors and spend less time tracking pending payments. You can track all your transactions on the PayUmoney dashboard, even when you are on the go.

This will help you devote more time to understanding your customers and their needs, implement them and expand your business.

Need Not Rely on External Credits

With the Same Day Settlement feature, you don’t have to take a costly loan and worry about repayment issues. A regular inflow of cash will help you in budgeting and managing your business better and meet your day-to-day cash demands.

How to Enable PayU Same Day Settlements

You can start receiving same-day settlements by simply getting in touch with your Relationship Manager and signing the agreement or by reaching out to us here.

We understand that healthy cash flow is essential to run the business smoothly and with ease. That’s why now don’t keep waiting for your hard-earned money for days. PayU Same day Settlements feature is the quickest, most convenient and a great way to be prepared for your business’s cash demands.

Sign up for our Same Day Settlements feature and grow your business just like our 4.5 lakh + online businesses do! PayU is India’s leading payment solution provider. And we are always excited to empower our users with all these consistent enhancements and feature updates!

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But what is cash flow? It is the net amount of money being transferred in and out of business. In other words, it is the difference between what the company owns vs what the company owes. And ideally, there should a good gap between the two for conducting daily operations smoothly and business growth.

A negative cash flow, on the other hand, affects the ability of a company to expand & explore or even conduct their day-to-day activities. In this post, we will give you some tips on how to improve the cash flow management of your business easily!

1.Deposit Cash Balance in Business Savings Account

Always keep your personal and business finances different. This will make monitoring of your cash flow, tracking expenses, and tax planning easy. If you don’t have it already, open a separate business savings account, with the best rate of interest.

Compare different banks, the interest rates they offer along with the schemes. Also, make sure there are no hidden charges such as monthly maintenance fees, etc. Check that it provides a good return on your money as it is generally much higher than your personal savings accounts.

2. Liquidate Excess, Obsolete Inventory

The demand for products keep changing in the market. And the inventory that you have may get old and obsolete. Rather than clinging on to the materials in a hope that someday someone will purchase them or it will come to use, it makes sense to liquidate or resell it.

Selling your old inventory at a lower price is better than keeping it on the shelf all life! Some money is better than no money. Also, it will take up space that can be utilized for keeping something else. And moreover, not selling it is only adding on to your storage and maintenance cost.

If you have an excess of raw materials or equipment, you can consider re-selling it to other buyers within the industry. But if there are products or services that have gone out of fashion or become old, you can re-sell them by offering heavy discounts.

3. Ask for Advance Payment on Large Orders

If someone places a large or a custom order, don’t shy away from asking for at least 50% advance payment upfront. If it is a customized order, it will be useful for only that individual or organization. Therefore, taking an advance payment would provide you security as well as lessen the risk of getting a late or reduced payment at the time of delivery. Also, it will prevent you to use a lot of cash from your own pocket on the order.

Also, you can use the advance payment in producing the item or product. Customers do understand such things and you can also make it a part of your policies to avoid any arguments.

4. Offer Early Payment Discounts

First things first! Make sure you send out invoices on time. If you have a set procedure of sending out invoices quickly, you will not have to burn your time chasing them. What you can do instead is, send your customers reminders when the invoice is due.

Generally, companies give 30 days after the invoice is sent, to make the payment. However, you can offer your customers discounts for making the payments on time or even before it. For instance, you can offer a discount saying that people who make payments in the first 10 days of sending the invoice will get 2% concession! You might start receiving payments early, making your cash flow better. Make sure you set a procedure for this too!

5. Install Payment Gateway to get Payments Faster

Offer an online payment solution to your customers for quick payments. You can ask your customers to pay online via cards, UPI, wallets, etc. so that there is no issue of sending invoices and receiving payments later.

Payment Gateway such as PayUmoney offers all payments options such as debit/ credit cards, UPI, wallets etc. It is highly secure and convenient to use. Also, it has same day settlement feature for its merchants through which a merchant receives settlements on the same day of the transaction, via IMPS for the amount less than 2lac per day. Therefore, you will get your payments on the same day, the customer pays!

Signing up with PayUmoney will definitely improve your cash-flow and help in the growth of your business.

6. Revaluate Day-to-Day expenses

Managing cash flow is not just about getting more money in the system (inflow) but also keeping a check on the money going out (outflow). Check your business expenses regularly and see if all of them are necessary and the best available option in the price that you are incurring on them.

Streamline your processes with more efficient ones. Make use of various software and tools available in the market to cut down on time spent on lengthy processes such as sending invoices to all the customers.

Know that you do not have to buy everything new. Look around and see what equipment can be bought second hand and is of one-time use only.

Conclusion

Having a positive cash flow gives you a lot of courage and support to carry out new experiments in business. Using the tips above can improve your business cash flow to a great extent. It will keep you out of money stress and help you with your future growth.

As mentioned above, integrating with a good payment solution is essential for getting payments fasters as well as to provide a seamless payment experience to your customers. PayUmoney is India’s leading payment gateway. To know more,

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