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What is the difference between Cash on Delivery and Freight on Delivery mode of dispatch?
I guess Cash on delivery means you have to pay frieght amount as well as material value whereas in Freight on delivery basis you just pay Freight amount . please clarify!
Answer:
You got it! When you buy something from someone and it has to be shipped, normally the freight company doesn't care how you and the shipper settle things. But, suppose you haven't established credit with the shipper,((( or your credit is poor)) you want the goods and he wants to sell it to you. He then can ship it Cash on Delivery, (( or COD) In this case, shipper specifies to the carrier how much to collect, and the carrier will collect this amount from you and remit it to the shipper. The carrier will call you before it attempts to deliver the goods, in order to give you time to get a check ready for the carrier. Unless the shipper specifies
customer check OK" the carrier will ask for a cashiers' check or money order.
Freight on delivery means you and the shipper have worked out payment arrangements for the goods ( carrier not involved) and all you pay is the carrier for freight charges.
( usually referred to as " freight collect""
Usually, you will have established credit with the carrier, and we will bill you for the freight charges by mail.
The shipper can pay the freight, or he can say " I am not paying the freight" in which case the receiver will have to pay the freight charges.
I have worked in trucking for many years. Normally, we don;t care who pays the freight charges, as long as someone does.
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