COD and CHECK SALES

Allan Cris Ricafort

14 May 2022
2nd sem, AY 2021-2022
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FMGT 60 - RICAFORT
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COD SALE
• COD sale is a cash sale.
• This type of sales has become a prime
concern of the credit and collection
department because many “schemes” and
“strategies” have been created by bad faith
buyers.

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Standard Operating Procedures

for COD Sales
1. COD – Collect on Delivery
2. Cash basis customers – frequent defaulters
on COD terms.
3. COD sales must be avoided if delivery of
merchandise is done at one place and
payment to be effected in another place.

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Standard Operating Procedures

for COD Sales
4. Place of delivery is unusual –report and
request for instructions
5. Covered by a Purchase Order or Letter Order
of the customer
6. When merchandise is ready for delivery, the
customer should be contacted by phone or
by other means.
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Standard Operating Procedures

for COD Sales
7. COD shipment should be indicated on common
carrier’s bills of lading
8. Place of delivery and person authorized to receive
merchandise must be stated on the Sales Invoice
(SI) or Delivery Receipt (DR).
9. COD [Cash Only] or COD [Postdated Check Not
Acceptable] must be stamped in every delivery
documents.
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Standard Operating Procedures

for COD Sales
10. COD sales is a Cash Sale.
11. Credit Manager should be authorized to
decide whether the COD sales can be paid
by check.
12. If a check is to be accepted for a COD
sale, there are some precautions.

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Standard Operating Procedures

for COD Sales
13. Original copy of the DR or SI will only be entrusted
to the customer after the merchandise is paid.
14. A specific limit of responsibility, as to amount of
COD sales an authorized delivery man can
handle, should be set.
15. Cash deposit of 50% of total amount is sometimes
required from transient and new customers and
balance to be paid on COD term.
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Precautions when Accepting Check

for a COD Sale
a. Check payment from the unknown or new customer
should first be cleared with the bank.
b. For customers known to have issued bad checks in the
past, prior clearance of check is required.
c. Out of town checks or irregular ones should not be
accepted.
d. Avoid third party check or drawn to “Cash”.

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Precautions when Accepting Check

for a COD Sale
e. Name of the bank and check numbers should be written
on receipt issued for COD sales by check.
f. In all cases, check payment on COD is only acceptable
from a known person or customer.
g. New customer should be given a trial period before his
check is accepted.
h. Avoid accepting check on COD sales on Friday
afternoons and Saturdays.

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HANDLING CHECKS
• The credit collection personnel must be trained on how to
handle checks.

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POSTDATED CHECKS

• The date of issue on the check is a future date.

• As a general rule, field collectors should not accept
postdated check. However, if the check is
postdated for 1 or 2 days, it would be alright to
accept it.

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POSTDATED CHECKS
Case:
• Collector A paid a visit to Mr. Wang, an installment
customer, on a Monday, the 29th of May, 2021. Mr.
Wang issued a check dated May 31, 2021. Mr. Wang
works as an accountant at a branch of Toyota
Motors. Should the collector accept the check?

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ANTEDATED CHECK

• This is opposite of a postdated check. It is dated in

the past.
• If nothing else is wrong with the check, an
antedated check is acceptable.

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ALTERED CHECK

• If the amount, date, or any entry has been altered,

the owner of the check must sign in the alteration.
• No longer allowed by PCHC.

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UNSIGNED CHECK

• An unsigned check is worthless.

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UNDATED CHECK

• It is essential that a check be complete on its face.

• All these must be filled out: date, payee, amount in
numbers, amount in words, and the drawer’s
signature.

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THIRD-PARTY CHECK

• It is a third-party check if the installment customer is

not the owner of the checking account and the
check was issued to him by someone else.
• It is always advisable to reject that kind of check.

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YOUR COMPANY AS PAYEE

• The check should

always be issued in the
name of the company.
• It cannot be encashed
by anybody else
should it be lost or
taken by someone.
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BEARER CHECK

• A bearer check is one

where the payee is
either “bearer” or
“cash”.
• It can be encashed at
the bank by the bearer,
or whoever holds it.
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DEFACED or TORN CHECK

• When certain
parts of the check
are missing,
defaced, or torn,
the check is
worthless.

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CROSSED CHECK
• The owner of the check would sometimes cross the
check.
• This is a marking, usually 2-straight diagonal lines,
made in the top left-hand corner of the check.
• When a check is crossed, it means that the check
could only be deposited in a bank in the account of
the payee.

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CROSSED CHECK

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CORPORATION as PAYEE

• When a check is payable to a corporation, and a

customer wants to pay with that check, it would be
best to refuse to accept.
• For example, if a check was issued by the Provincial
Government in favor of Tricor Industries, Inc. and a
walk-in customer pays with this check, it might result
in a lot of complications.
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AMOUNT IN FIGURES DIFFERENT FROM

AMOUNT IN WORDS
• An example: “Pay
P254 – Two Hundred
Forty Five Pesos only”.
• When this happens,
either refuse the check
or politely ask the issuer
of the check to issue
another one correctly
done.

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GOVERNMENT CHECKS

• All government checks, whether national, provincial

or municipal, always have 2 signatures.
• If one signature is missing, do not accept.

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CERTIFIED CHECK

• It is a check issued by a checking account depositor

which has been certified by the bank as being
funded.
• This is a good check since it has already been
deducted from the depositor’s balance.

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Markings at the Back

of the Check
• When a case has markings
in the back, it is possible
that the check has
already been negotiated
by someone else.
• If the collector is paid this
kind of check, it must be
rejected outright.
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END OF THIS MODULE.