Cash on Delivery Reconciliation (Accounting)

Understanding the COD Reconciliation Dilemma – Aristotle ConsultancyE-commerce has taken the world by storm. Every business venture is taking the “e-way”, setting up their shops at the virtual mall. Beyond any speck of doubt, internet has served as the backbone for the e-commerce boom. The wide access to the inexpensive internet has facilitated the proliferation of the e-commerce ecosystem. However, there exists another support system, an unsung hero of sorts, whose contribution to making online shopping a breeze cannot be neglected: logistics.

Many enterprises in the e-commerce sector are new age startups that rely heavily on funding from various sources such as venture capitalists and angel investors. Still many of them are yet to become profitable and financials remain tight. In such a scenario, the additional expenses of maintain an independent logistics network might prove to be extremely taxing for these already cash strapped enterprises. Majority of the e-tailers have opted for outsourcing the entire logistics function to specialized service providers in order to avail of the benefit of specialized services and low cost offered by them. With the advent of e-commerce, logistics has witnessed the emergence of a whole new dimension. Many logistics partners have established a separate business vertical in their operational structure to fully capitalize on new opportunities presented by the e-commerce sector.

The cash on delivery facility has made it possible for the conservative Indian society, traditionally wary of online transactions, to reap the benefits of virtual shopping. As the name suggests, cash on delivery (COD) allows a buyer to make payment once the product has been delivered, rather than making payment online at the time of placing the order.  However, the synergy of e-commerce and logistics has sprung up a new challenge, namely, cash on delivery reconciliation. Let’s take an example to understand what COD reconciliation is. ABC e-tailer gave goods worth Rs. 10,000 to its logistics partner on Monday to be delivered to various customers. Entries for the same were passed in the books of accounts of both the players. All the goods were delivered, however by the end of the day, the amount of Rs. 10,000 could not be deposited in the bank due to delays. This creates a discrepancy in the books of accounts of both the players as the amount deposited in the bank as on a particular day is not the same as the value of goods in question. This necessitates the need for COD reconciliation, so that any mismatch in the books can be explained and accounted for. However, since the concept of e-commerce and cash on delivery is still very new, logistics companies find it difficult to efficiently manage COD reconciliation. At the same time, the matter of COD reconciliation and proper book-keeping cannot be ignored in the light of prudent business practices.

Aristotle Consultancy is an experienced business partner offering tailor-made financial solutions to logistics companies, taking care of all their book-keeping and COD reconciliation matters. With a wide ranging experience of working with many e-commerce giants such as Jabong and Food Panda and also with logistics partners such as GoJavas, our specialized knowledge and experience can be leveraged to offer competent services to overcome all your operational financial issues such as working capital management, financial analysis, business intelligence, analysis of revenue and expense reports etc. Aristotle Consultancy is the right partner to allow your logistics firm to deliver high performance, by outsourcing all financial business functions.

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