What is the payment term on delivery?

Understanding Payment Terms on Delivery: Flexibility and Convenience

Payment terms on delivery provide businesses with flexibility and convenience in managing their cash flow and goods receipt. Two primary payment options are commonly used:

1. Immediate Payment Upon Delivery

This option requires the buyer to make payment before taking possession of the goods. The advantage of this method is that it secures the merchandise immediately upon arrival. By making immediate payment, the buyer ensures timely access to the goods without any delay. This option is suitable for businesses that prioritize prompt delivery and do not require additional time for payment arrangements.

2. Payment Deadline After Subsequent Delivery

Under this arrangement, the buyer receives the goods upon delivery but the payment is not due until the arrival of the next shipment. This option provides an extension of payment terms for the previous shipment, allowing the buyer to manage their cash flow more effectively. It is beneficial for businesses that prefer to consolidate payments or have fluctuating cash availability.

Both payment terms on delivery offer flexibility in settling accounts, allowing businesses to adapt to their specific circumstances:

• Immediate payment suits businesses with strong cash flow and a need for immediate access to goods.
• Payment deadline after subsequent delivery benefits businesses that prioritize cash flow management and can tolerate a delay in payment.

When choosing the appropriate payment term on delivery, businesses should consider factors such as their cash flow situation, delivery schedule, and business needs. By carefully selecting the payment option that aligns with their requirements, businesses can optimize their financial management and ensure smooth goods receipt.