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Cash On Delivery | Advantages and Challenges

Covid 19 pandemic has accelerated the rate of adoption of e-commerce in the Arab world, which in turn contributed to the entry of thousands of new e-commerce and delivery companies to the market. While online purchases gained popularity however the popularity of e-payments lagged behind, thus emerged the need to devise methods of payment, which are trusted by both the seller and the buyer. In this regard, Cash On Delivery has emerged as a primary payment method in the Arab world.

What is Cash On Delivery (COD)?

Cash on Delivery refers to the cash payment made by the buyer upon receiving the parcel. This service is the preferred method of payment for Arab shoppers, as statistics indicate that 76% of e-commerce orders in the Arab world are paid in cash upon delivery. But why?

_This payment method is safer for shoppers, as there is a possibility that the buyer will be exposed to fraud when paying electronically.

_ Not everyone owns a Visa card. In Saudi Arabia, for example, the percentage of shoppers who use a visa card does not exceed 18%.

– This method reduces risk for the consumer when buying, as he can return the parcel if he is not satisfied with the order, without losing a penny.

– The buyer has time to manage his financial affairs, shoppers can order now and pay later.

Despite the many advantages of the Cash on Delivery payment method, which primarily have to do with customer trust and spending, it also has its disadvantages. The Cash on Delivery payment method presents two main challenges to delivery companies, the first being the challenge of controlling and managing the flow of money in the cycle which starts with the customer going through the driver and the accountant to finally get to the vendor. As for the second challenge, it is caused by the fact that the rate of return for cash deliveries is twice as high as that of pre-paid deliveries.

Given the significance of the challenges presented by the Cash on Delivery payment method various delivery management software programs such as FarEye and Shipsy have created solutions that contribute towards reducing the pains of cash on delivery. For example these software companies introduced features that contribute towards decreasing the rate of return for parcels.

However, while such softwares reduce the pains of COD, they do not touch upon the real main problem of COD, which is managing cash and the cycle that the cash goes through. The cash cycle with COD payments is long and complex. It starts with the customer paying the driver upon delivery of the order, and then the driver has to pay the cash from all his deliveries to the delivery company accountant, then the accountant has to figure out how much the company owes every vendor and then the accountant has to send the money back with the driver to deliver to the different vendors. Each step of this process holds great risks, and if it is not automated and digitized, it could be the reason for the decline and failure of the delivery company.

How is that?

-Money during this process is subject to theft or embezzlement.

-Manual accounting takes a lot of time and effort and has a high percentage of error.

-This process requires huge human resources.

-This process is subject to human error.

LogesTechs, delivery management software, has developed a system that is the first of its kind, which reduces the error rate in accounting for Cash on Delivery to 0% and gives perfect results. The cash-on-delivery management functionalities through LogesTechs delivery management software digitizes and automates every step of the Cash on Delivery order management.

What are the advantages of Cash on Delivery Management System?

Liability System:
It is a control system that keeps management aware of the location of the money in each step of the delivery process.

Saves time and effort:
The system saves time and effort for both the accountant and the driver, as it eliminates paperwork, and allows employees to enter data as quickly as possible.

High integrity and transparency:
If using a delivery management software that offers Cash on Delivery management functionalities, then there will be no room for any theft or embezzlement to occur without identifying the perpetrator.

Reduces human errors:
By integrating your accounting software with your delivery management software, there is no room for error in numbers, names, or any other data properties.

Financial visibility:
Delivery management softwares that offer Cash On Delivery management functionalities provide full visibility over the movement of money within the company, regardless of the delays or external factors that affected the progress of the process, as it remains monitored.

Despite the many advantages and challenges of this payment method, it is clear that Cash On Delivery is an essential method in the Arab world and will not disappear soon. To learn more about LogesTechs delivery management software, and the cash on delivery management functionalities that it provides, visit our website: logestechs.com

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