How to get off COD with a supplier: a dated plan to get your 30-day terms back

Cash on delivery means the driver wants payment before the pallet comes off the truck. The first week, you cope. By the fourth, you’ve noticed that every order now ties up cash you used to have for 30 days.

The way off COD isn’t a clever phone call. It’s a dated plan: clear what’s owing, show a clean run, then lodge a proper credit application. This guide sets out that plan, what COD is really costing you, and what to have ready. If you need to fund the next COD order today, start with the supplier COD page. This guide is about getting off it.

How do you get off COD with a supplier?

You get off COD by clearing any overdue balance, paying every COD order on time for a run of orders (commonly 60 to 90 days), then lodging a formal credit application for a modest limit with trade references and bank statements. Credit is the supplier’s commercial decision, so nothing is guaranteed, but a record beats a plea.

Here’s the work-back plan. Day 0 is the day you decide to fix it.

When	Move	Why it matters
Day 0–2	Email the credit controller: what triggered COD, what’s owing, and what restores terms	You get the supplier’s own conditions in writing
Day 0–7	Clear any overdue invoices; confirm the balance in writing	An account with arrears usually can’t be reopened
Day 7–60	Pay every COD order on time, every time; keep copies of remittances	Builds the payment record the supplier will look at
Day 45–60	Collect two or three trade references; pull bank statements; confirm who signs	The application pack is ready before you need it
Day 60–90	Lodge the application, asking for a modest limit	Timed to the supplier’s review date if they gave you one
Day 90+	If declined, ask what’s missing and set the next review date	One no isn’t the end; it’s a new date

Nothing here is magic. The point is that each step produces something the supplier can see.

Why did the supplier move you to COD in the first place?

Suppliers usually move an account to COD because of late payments, a breached credit limit, a reduction in their credit insurer’s cover, or a general review of a risky sector. The reason decides how long the fix takes, so ask for it in writing before you do anything else.

A short email is enough:

“Could you confirm in writing why the account has moved to COD, what balance (if any) is outstanding, and what you’d need from us to review terms — including your review date?”

Typical answers sort into three:

• Your payment pattern. You were paying late. This is the most fixable: pay on time and say so.
• A limit breach. The balance went over the ceiling. Fixable by staying well under it once terms return — see supplier cut your credit limit for how headroom works.
• Something outside you. Their insurer, their bank or a sector-wide review. Slower, and the supplier may not be able to change it quickly. Here a second supplier is the better lever.

If the supplier won’t tell you, that’s information too.

What does COD actually cost you each month?

COD removes roughly one payment cycle of purchases from your working capital, permanently, for as long as it lasts. The cash isn’t lost, but it’s tied up in stock before your customers have paid you. Measure it, because that number tells you how much to spend on fixing it.

Illustrative example only. A plumbing supplies buyer spends about $40k a month with one wholesaler on 30-day terms, and sells to customers who pay in about 30 days. On terms, the wholesaler’s credit financed the stock between delivery and the customer paying. On COD, the buyer pays up front and waits 30 days for the customer. The business now needs around $40k more working cash than before, every month, forever, to trade at the same volume.

That is the figure to hold against any bridging option. If COD ties up $40k and the supplier is likely to restore terms in 90 days, you’re funding roughly a quarter of a cycle of tied-up cash, not the whole $40k forever. If the supplier isn’t going to restore terms at all, you’re really deciding how to permanently re-fund a working-capital gap.

What will the supplier look at in a credit application?

A supplier looking at a credit application checks who you are, how you pay and who stands behind the account. Typical applications ask for your legal entity and ABN or ACN, director details, a requested limit, bank statements or financials, trade references and sometimes a personal guarantee (Sprintlaw’s supplier credit guide lists the usual items).

Have these ready before day 60:

• Entity details: registered name, ABN/ACN, trading names, addresses and an accounts contact email.
• Director or owner details: names, trading history and ID, since suppliers verify these against public records.
• Recent bank statements, and financials or management accounts if you have them.
• Two or three trade references from suppliers that give you terms now, ideally of a similar order size.
• A realistic requested limit. Sprintlaw suggests working from your expected monthly spend, enough for a typical order plus a buffer for one extra order. Asking for your best-ever month invites a refusal.
• Your COD payment record: the dated remittances showing every order paid on time since the switch.

That last item is the one most owners forget. It’s your strongest evidence, and you’re generating it right now.

Should you sign a personal guarantee to get terms back?

A personal guarantee makes you, personally, liable if the business doesn’t pay the supplier. It’s common on higher limits and sometimes on reopened accounts. Don’t refuse on reflex or sign on reflex: read what you’re guaranteeing and negotiate the limits first.

Check four things:

1. Who is guaranteeing: one director, all directors, a spouse who isn’t a director?
2. Is it capped? A guarantee capped at the credit limit is a different thing from an unlimited one.
3. What triggers a claim and how long the supplier has to make it.
4. Whether legal costs can be recovered from you personally.

A good compromise is a lower limit without a guarantee for the first six months, with a higher limit after a clean record. Suppliers often agree because it costs them nothing. For anything large, a solicitor’s half hour is cheap — and our new customer and supplier setup guide covers the paperwork side of opening accounts.

What can you do while you’re stuck on COD?

While you’re on COD, the aim is to keep stock flowing, protect the payment record and stop dependence on one supplier. Three moves do that: split the order, open a second account and, where the cash gap is real, bridge it.

• Split the order. Take only what you need for confirmed jobs on COD; don’t stockpile.
• Open a second account. A second supplier for the same range gives you a fresh trade reference and a fallback. New accounts usually start with a lower limit, and that’s fine.
• Ask for a partial restoration. Some suppliers will give a small limit, say one typical order’s worth, as a first step back. Ask for it by name.
• Bridge the gap, if it’s real. If COD is stopping you taking on work, funding sized to the gap can keep trading going while the record builds. Same-day funding is possible for smaller unsecured amounts, and larger property-secured funding is possible within 24–48 hours. Paying the supplier straight from the funds, using verified details, keeps the record clean — see paying the bill direct.

If the gap is stopping you taking on work this month, check your options with a 60-second enquiry.

What if the supplier says no?

A no usually means “not yet” or “not at that limit”. Ask what would change the answer, ask for the next review date and diarise it. Be honest about whether the real issue is your payment pattern or the supplier’s own risk settings.

Practical next steps after a refusal:

• Ask for a smaller limit or a trial period.
• Reapply at the review date with another run of remittances.
• Move volume to the second supplier and keep the first for what only they stock.
• Know where help exists. If you believe the decision was unfair or there’s a genuine dispute, the ASBFEO can explain your options and point you to low-cost dispute services. It notes that a case manager’s help can take up to about 12 weeks, so it’s a long game, not a Friday fix. Credit decisions are normally commercial, so the faster lever is usually a record or an alternative supplier.

One more angle if you’re a smaller supplier to a big business: the Payment Times Reporting Scheme regulator says it is moving from education to enforcement (August 2026 update). That helps you get paid by large customers on time, which is often the quickest way to stop needing to pay suppliers upfront.

What should you have ready before you ring a lender about the gap?

If COD is draining the account and you want funding as a bridge, a lender needs documents and decisions, not a story. Have these ready.

• The supplier’s email confirming COD and what’s outstanding
• Your last few months of business bank statements, ideally with online access to share
• A list of the next 30 days’ purchases and the jobs or sales they feed
• Your debtor list: who owes you, how much, and when it’s due
• Who signs: every director, and anyone whose property might be offered as security
• Your exit: the customer receipts that will repay the funding, with dates

A worked example

Illustrative example only. A florist buys from a wholesaler on 14-day terms, about $12k a month. After a run of late payments, the wholesaler moves the account to COD. The florist emails asking what restores terms; the answer is “three months of on-time payments and a fresh application”.

The florist clears the $3k overdue balance in week one, pays each of the next dozen COD orders on delivery, and keeps the remittances. They open a second account with a rival wholesaler to spread the range. At day 75 they collect two trade references, attach three months of bank statements and ask for a $6k limit, about a typical order plus one extra. The wholesaler approves $5k with no guarantee and a review at six months. The florist has gone from COD to terms in just under three months, and in the meantime used a small bridge only for the Valentine’s Day stock peak.

COD isn’t forever. Let’s see where you stand

Getting off COD takes a few disciplined months, and plenty of good businesses spend part of a year there. The hard part is the cash gap in the meantime. We work with owners in exactly that spot: trading well, paying their way, and short of working capital because a supplier changed the rules.

Enquiring takes about 60 seconds, and your credit file isn’t touched just for asking. We don’t send your details to a pile of lenders, so your phone won’t light up for a week. A real person reads your enquiry, looks at the supplier, the monthly spend and the dates, and rings you to talk through what’s realistically possible.

Please fill the form in accurately — what the COD gap is, how often you order and when your customers pay — so we can match the right option first time.

Find out where you stand →

Prefer to talk it through? Ring 1300 752 188.