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Wed May 2 2018 22:54:24

Payment Delays Now a Possibility on Amazon

By: Ina Steiner

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One of the advantages to selling on Amazon is that buyers must pay immediately, and sellers get the funds right away, subject to their disbursement schedule. That's changing to some extent thanks to Amazon Business "Pay by Invoice," though it's important to note it won't affect purchases from "regular" (non-Business) buyers.

Amazon Business launched in 2015 to offer features attractive to businesses of all sizes, such as multi-user accounts, approval workflow, purchasing system integrations, and tax exemptions. On Tuesday, Amazon sent a letter to US sellers informing them it was launching Pay by Invoice and that sellers' items would be subject to such purchases by Amazon Business customers. The email read in part:

"As a seller on Amazon, you do not need to do anything to make your items available for purchase by Amazon Business customers using Pay by Invoice. Your products will automatically become available for invoiced purchasing with no added fees or effort. 

"Amazon will handle all aspects of the invoicing process, including credit risk assessment, billing, and collection activities. 

"For all Pay by Invoice transactions, payment to you is guaranteed, even if the Amazon Business customer is late or defaults on their payment to Amazon.

"For any invoiced orders that you receive on Amazon, your payment on these orders will be credited to the available balance of your Selling on Amazon account as soon as the customer payment is processed and no later than the 7th day past the due date of the customer's invoice."

Previously sellers had to meet certain qualifications and proactively sign up to sell on Amazon Business. We are seeking confirmation from Amazon if that is still the case, and whether or not the new practice applies to all third-party sellers. (See update below.)

While additional sales sound like a positive, some sellers said waiting for payments could put pressure on cash flow since they still have to pay their suppliers and vendors in a timely fashion.

There's no way to opt out, but Amazon does offer one way for US sellers to get paid faster for invoiced orders - but it comes at a cost. According to the letter:

"We are also launching the ability for you to get paid faster for invoiced orders. With this feature, your payment for Pay by Invoice orders will be credited to the available balance of your Selling on Amazon account immediately after shipment for a processing charge of 1.5% of the invoiced order amount."

When the program launched in the UK in the fall, one seller said Amazon was offering selected business customers free credit "at our expense." Another seller thought it was a good way to bring in additional orders since many businesses can only pay by invoice.

One EcommerceBytes reader who received the letter yesterday called the program "forced coercion into making us give net 30 terms on sales." Another reader's reaction: "So you can't opt out and you're forced to wait on payment. If you want to get paid faster you have to pay extra? And what happens if the customer never pays???"

The answer to the last question: Amazon handles the risk of non-payment. It promises to pay sellers "no later than the 7th day past the due date of the customer's invoice," and as it noted, it guarantees payment to the seller "even if the Amazon Business customer is late or defaults on their payment to Amazon."

It's important to note that Amazon Business will not allow every buyer to pay by invoice. It tells business customers: "Pay by Invoice gives approved Amazon Business customers the option to purchase items on credit. Amazon sends an itemized invoice email when items ship. The due date and payment information are included in each invoice."

Those buyers who do pay by invoice must pay their bills by the due date via wire, ACH funds transfer, or check payment, and Amazon Business does not support payment by cash, money order, debit or credit cards (thus saving on payment processing fees, as one seller pointed out).

Amazon Business will launch Pay by Invoice in the US after June 30, 2018. "You will receive additional information and resources prior to the launch," Amazon told sellers.

We've asked Amazon PR several questions about the program and will update this post as we learn more.

Update 5/3/18: An Amazon spokesperson confirmed the Pay by Invoice (PBI) change is applicable to all sellers regardless of their enrollment in the Amazon Business Seller program. 

When asked if there was a way to opt out, she said, "Amazon's mission is to offer the earth's biggest selection of products to our customers, and this includes our Amazon Business customers. To ensure a great shopping experience for Amazon Business customers including those who qualify for Pay by Invoice payment method, we believe that all selection should be available to them, and we believe the services and protections we offer to sellers makes an opt-out unnecessary. This is a great opportunity for sellers and we want them to be able to participate fully."

She said initially, Pay by Invoice would only affect a small amount of sellers as it only applies to orders from qualified Amazon Business customers. But she said the program comes with some distinct benefits for sellers:

- Amazon is guaranteeing the payment to the seller by taking on the credit risk for these transactions. If any PBI customer is late or payment or defaults, Amazon still pays the seller within 7 days after the due date of the Invoice. Amazon is removing the payments risk in Invoicing. 

- For sellers who have cash flow concerns we are providing the get paid faster option which has a processing charge of 1.5%

- Business customers who prefer to pay on terms (Invoicing) would not buy from Amazon sellers in the absence of Pay by Invoice option. These customers tend to be larger buyers with higher average ASPs and larger order sizes. These large Amazon Business customers also have shown a preference for consolidating their spend among fewer suppliers so they are unlikely to place orders from an Amazon seller directly outside of the Amazon Business platform. So sellers can expect to get incremental sales in the form of larger orders for higher priced items from customers who would be unlikely to buy from them otherwise.

Here is some additional information we obtained about how the program impacts sellers:

- The Order details page in the Seller Central tool will have a new "Payment Method" field which will show value "Invoicing" for all Invoiced orders. Order reports will have a new Payment Method Detail attribute showing the same value.

- The due date of all Invoiced orders will be provided to sellers for all invoices that are pending payment 

- Payments for Pay by Invoice orders will be credited to the available balance of the seller's Selling on Amazon account at the latest by the 7th day past the due date of the Invoice. The due date is determined based on the payment term of the customer (30 days after shipment in the case of Net30). (Amazon wouldn't discuss the terms they offer customers, but Net 30 is standard.)

- Get paid faster will be available as an account setting. Sellers will be able to make their choice of using get paid faster on a new account setting page prior to the launch

- No categories are excluded from this program. All selection on Amazon is made available only to Amazon Business customers who qualify for Pay by Invoice.




Comments (13) | Permalink

Readers Comments

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

by: DingDong This user has validated their user name.

Thu May 3 14:10:50 2018

Sellers need to check their states Money Transmitter laws and regulations. Many states have where the person is to received their money in 3 days.
NOW, they want to charge a fee for you to get your money.   BS

So glad I do less than $40 of business on Amazon if at all.

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

This user has validated their user name. by: Marie

Thu May 3 15:01:56 2018

@dingdong

They aren't talking about Amazon having the money for 30 days before remitting it to the seller.  They are extending credit to the buyer for 30 days, so the buyer has NOT paid yet when the seller HAS shipped with this program.

That has nothing to do with banking laws or money transmission rules.

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

by: donald This user has validated their user name.

Fri May 4 00:57:19 2018



This sounds like more BS from Amazon.  Why do we have to pay an extra 1.5% to get our money if THEY are the ones offering the credit. Sounds more like WE are the ones offering the buyer the credit.

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

by: val2525 This user has validated their user name.

Fri May 4 01:32:38 2018

So glad I don't sell on Amazon.

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

by: glasspackaging This user has validated their user name.

Fri May 4 08:09:50 2018

Our wholesale company does not offer credit terms... the risk of loss and maintaining s full credit dept was too high (historical- we gave credit for our first 15 years) ....

This is a win win for vendors ... business vendors... higher prices on Amazon then wholesale AND. no risk of loss or maintaining a collection dept ...

I would even lower prices if they would waive the 15% commission LOL ....

THAT SAID.... why would a credit worthy business even buy on Amazon, other than very small orders?

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

by: go-figure This user has validated their user name.

Fri May 4 09:49:03 2018

@Donald

You are 100% correct.

And if Amazon's track record with FBA refunds and reimbursements are an indicator, much like with that program, we will have to track and monitor the purchases and payments under this program or you will end up being shorted, payment withheld for ''customer service'' purposes, etc.

More efforts by Amazon to garner an ever-growing portion of all commerce activity at the expense of its 3rd party sellers (or PATSY sellers as Amazon defines it).

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

by: donald This user has validated their user name.

Fri May 4 13:32:07 2018


@ go-figure

I too agree with you 100%.  I'm still waiting a release of a $300 hold from an A-Z claim the customer lost 3 months ago. Is all lost in their stupid bookkeeping system that only a martian understands and all I get from SS is hit and miss support and runaround.


Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

by: shut1968 This user has validated their user name.

Fri May 4 16:02:44 2018



“Amazon doesn’t allow sellers to opt out, and though it allows sellers to get paid faster for PBI transactions, there’s a 1.5% fee for doing so, which has incensed some sellers.”

This is something that should be illegal.

Holding sellers funds and collecting God knows how much interest per day off of them should be illegal as well.

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

This user has validated their user name. by: Marie

Fri May 4 18:52:26 2018

@shut1968

Amazon is NOT HOLDING FUNDS.  They are extending a  30 day payment term to these business accounts.  But the seller has to ship right away.  The seller will wait to be paid by 30 days but Amazon guarantees they will get paid.

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

by: Moonwishes This user has validated their user name.
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Fri May 4 22:34:59 2018

As many on the Amazon forum are saying, if Amazon is going to pay us even if the customer doesn't, then why make us wait? But then Amazon doesn't want to be left holding the bag waiting to be paid either. Part of the problem also is not knowing what kind of terms they will be giving 30-60-90 or more?

Since I doubt I will ever even have to deal with this, I'm not going to worry about it, but I can understand the bigger seller's frustrations of having to pay to get money that is owed to them just so they can keep their cash flow flowing.

Amazon just doesn't seem to ever think anything through the 3P sellers viewpoint except imagining for us how much better life will be with this new rule. I wonder how long before Amazon starts forgetting that they made a promise to pay if the buyer doesn't? Perhaps as long as the INR if we use Amazon shipping. Sellers are losing those cases now and Amazon seems to have forgotten its promise. Or the automatic refund nonsense that was to save us time dealing with refunds. Does Amazon not realize how many orders we saved by the buyer having to discuss with us the problem.

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

This user has validated their user name. by: RKTOYS

Sat May 5 08:39:35 2018

@Marie
Amazon absolutely _is_ holding funds.  The article's misleading too, conflating "right away" and "subject to their disbursement schedule."  Right away is right away, not up to 14 days later.  That 2-week hold is pretty dangerous for sellers when the venue is full of thieves and ignores delivery confirmation.

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

by: shut1968 This user has validated their user name.

Sun May 6 00:00:02 2018

@Marie

I said "as well"  they do it on a daily basis to thousands if not millions of sellers for various different BS reasons.  If they are going to hold sellers funds for ANY reason all interest collected should be credited to the seller once the funds are freed up since the money becomes the sellers once the order has been confirmed as shipped and credited to the sellers account

Perminate Link for Payment Delays Now a Possibility on Amazon   Payment Delays Now a Possibility on Amazon

by: Troy Stiffler This user has validated their user name.

Sun May 6 14:59:36 2018

I like this. Approximately 10% of my sales go to business accounts. Whatever it takes to snag additional orders is A-OK with me.

When done right, I choose adaptation over fighting change.

My concern would be with the sellers who have very low margins. If your final profit is only 5% (which is very common among consumer products on Amazon), that payment delay needs to be considered. Though, if you're selling products with a 5% markup, you're probably selling to consumers - not to businesses who are paying on Net30 terms.

Another thing to think about, is that many businesses won't qualify for Net30 terms. Or they simply don't care (it's common practice to use Amex in place of Net30). I'd be surprised if this happens with more than 1 in 100 of my transactions.

Amazon sellers already wait 3-17 days to get paid. This doesn't seem like a very big deal to me.



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