When Does a Cash-on-Delivery Order Become Profit?
By ProfitIQ · Updated · 3 min read
The life of a COD order
Stage: Order placed
- Has the sale happened?
- Not yet: the buyer can still cancel or refuse
- Is there cash?
- No
Stage: Shipped
- Has the sale happened?
- Not yet
- Is there cash?
- No
Stage: Delivered, cash collected by the courier
- Has the sale happened?
- Yes
- Is there cash?
- The courier has it
Stage: Courier settles with you
- Has the sale happened?
- Yes
- Is there cash?
- It reaches your account
Stage: Returned or refused
- Has the sale happened?
- No: the sale never happened
- Is there cash?
- No
Why placed is too early
Placing a COD order commits the customer to nothing. They can refuse at the door, and some will. A report that counts orders as revenue the moment they are placed therefore includes sales that will never happen, and a day of new COD orders looks like a good day when it may be a bad one.
Why payout is too late
Counting revenue only when the courier pays you makes profit lag by one settlement cycle, and lumps a week’s sales into one day. Delivery is the point at which the sale is real: the goods are in the customer’s hands and the cash is collected. The settlement is a separate question, whether the courier then paid you correctly, and belongs to reconciliation.
The earning rule
- Prepaid orders (card, wallet, marketplace-collected) earn when they are confirmed or shipped: the money is already collected.
- Cash-on-delivery orders earn when they are delivered.
- Cancelled and failed orders never earn.
The rule applies per order, not per business: one shop commonly takes both prepaid and COD orders. ProfitIQ applies it that way, and shows orders not yet earned as revenue awaiting delivery or payment, so a day of new COD orders does not read as a zero day.
The orders that never arrive
Some COD orders are never delivered and never formally returned: they sit in the pipeline for months. They flatter any forecast, because they look like revenue about to arrive when it will not. Review COD orders that are older than your courier’s normal delivery window and resolve or cancel them, so “awaiting” means something.
Costs follow the same logic
The courier charge belongs to the order whether or not it is delivered: a parcel that comes back still cost you the trip. That is why a returned COD order has no revenue but keeps its courier cost. See what a return really costs.
See revenue awaiting delivery, separately
ProfitIQ shows earned profit and orders still awaiting delivery side by side, so a pile of new COD orders never looks like profit.
Frequently asked questions
When should I count a cash-on-delivery sale as revenue?
When the parcel is delivered and the cash is collected. Before that the buyer can refuse; after that the sale is real, even though the courier’s payment to you arrives later.
What is the difference between revenue and cash on delivery?
Revenue is the sale earned at delivery. Cash is the courier’s payout, which arrives in a later settlement. They happen at different times, and reconciliation checks that the cash equals the revenue less the courier’s charges.
How do prepaid and COD orders differ in profit reporting?
Prepaid orders earn once confirmed or shipped, because the money is already collected. COD orders earn once delivered. ProfitIQ decides this per order, so one store can take both.