Pay by Invoice - Cash Flow Impact


#14

You might need to think on this a bit differently.

Assuming you were always sold out, you would be missing out on that money. However, it is likely the case that you had the items in stock and that this is an additional sale.

Many businesses, probably even including your own, get payment terms from their suppliers. Net 30 is pretty standard. For some of my suppliers, I get Net 120 or even forward dating of 6 to 9 months. The supplier still gets their money, but it encourages me to order more, earlier since the cash flow impact is later. I am VERY sure that they see more business rather than having more inventory sitting on the shelf.

Dave


#15

I’m not certain about this, but wouldn’t leaving Amazon Business stop this? I thought at some point they would put in some type of fee for it. This way they are adding an incentive and our share of the cost is the 1.5% we should be getting extra for financing the 30 days.

I just hope Amazon does a better job monitoring their “7 days after payment” promise than they do the FBA no return reimbursements.


#16

For many of our sellers on Amazon, we are trying to move inventory and get cash flow- not have to wait another 30 or 60 days.
I am not a wholesale supplier so why should I be offering net sales to anyone on Amazon- business or otherwise?
You are telling me the pink leggings need terms?
I’m sorry but for me- this will not work.


#17

Yeah, this is a big nothing burger. The payments we get on Amazon “services” (which just means terms) is a tiny fraction of our overall payments.

If it was a large chunk, yes the new terms would matter, but it applies to so little sales that it doesn’t affect anything. We have a fair amount of sales to businesses, but very very few are signed up for this program. Heck, I think even our buyer account still has a person’s personal name and info on it. As long as it goes on the business credit card and gets shipped to the business address, most folks don’t know and won’t bother to change it in Amazon’s system.

I mean is anyone seeing even 1% of their sales come from this? I don’t think the sales with terms are a tenth of that even.


#18

At this time the number of sales with terms is minuscule. Clearly Amazon believes that is because few sellers have opted in, and they are going to make them a lot bigger by forcing sellers to accept these orders, saving the credit cad fees Amazon pays.

.


#19

The thing is I am retailing on Amazon … I am not a supplier for their business and so I have no desire to offer terms.

Net 30 barely covers getting inventory, shipping and stocking for FBA and the sale …
JMO


#20

This is just another asinine idea by Amazon. It won’t hurt Amazon’s cash flow, just the seller’s. Cash flow is the name of the game and I absolutely hate the idea that Amazon thinks it will just enable customers to take their good ole sweet time paying. When I sell an item, I want paid in my next disbursement. Not three, four or even six disbursements later.

:poop: on Amazon for this incredibly STUPID idea of forcing all sellers to take this.


#21

Yes, I get that.

Where inventory is scarce, getting paid earlier for it is better. However, having stock sitting on the shelf and sales going to competitors rather than getting that sale and just seeing the money later is increasing your income AND reducing your expenses. There is a storage cost (FBA or not) and not getting that sale in more than 30 days, is effectively reducing the cash flow.

My argument is simply that the ability to pay Net 30 does make sales and more sales than not having it.

Of course, if the inventory is scarce, it is not as beneficial.

As mentioned by several, the number of these purchases is very small - probably less than 1% - but that could certainly be higher, especially for business buyers purchasing products that businesses normally would purchase and it is just as likely that the retailers who sell those products also see payment terms delaying their own payments.

When you consider the typical situation for most retailers, they are either paying with credit card (which gives them close to 30 days between the purchase and the payment for that item) or they can request Net payment terms from their suppliers. The financial impact nets out against the benefit, which should normally be additional sales. For a business that pays cash up front for everything, it is certainly going to be a problem, but then, they should already be looking at their own credit options with all of their suppliers.

What is the difference between making a sale today and receiving payment for it in 30 days or not seeing that item purchased for 30 days? I believe with storage costs considered, it is still a positive to have it sold.

Dave


#22

I have no choice on FBA orders … but for FBM I do and will likely keep my control.

I just don’t like being forced to offer terms on products that are not business use items on credit.

If the item is expected to move that slow then yeah maybe … It’s juts more of a principle thing to me at the moment. :slight_smile:


#23

If one thinks that lowering the price will increase sales, one can do that.

This is a solution to a problem many of us do not want to solve. How we get incremental sales is our business decision.

If the Amazon business buyer was GM or Boeing, some of us will want their business. But it is not GM or Beoing because they do not want invoices,paying an invoice costs them money. The big guys use a credit card.

The Amazon business buyer is more likely to be a very small business with no credit card or with a tiny line on their card. Or someone doing RA on Ebay, who wants to live out of our inventory.

There have been rumors of Amazon moving into banking, and this might be part of a plan to do so.


#24

Been dealing with this for a while.
It’s a headache from a bookkeaping perspective. Unless you download the reports you have no way of knowing that an order is pay by invoice.

All in All it hasn’t effected us that much. The largest invoiced order was $600 the smallest was $10 I think I have had maybe 20 orders in the past year that were pay by invoice.


#25

It is not directly lowering the price, but there is certainly a cost of money consideration. You are still getting paid the same and unless you would have sold the item to someone else, this is still an additional sale. That is why it is an important consideration on whether you don’t have enough inventory for this additional business.

I agree that many companies would prefer to use credit cards. You might feel differently if you were paying the 3% credit card processing fees. My suppliers prefer Net 30 since they get to keep that part of the payment. They provide me a better discount for Net 30 than credit card payments. That improves my margins by 3%.

Dave


#26

I am paying the fee in my Amazon referral fee, and Amazon wants another 1.5% to get my money from these small business customers promptly

Apparently the Amazon Business program is a failure. Not surprising because large businesses did not need a special program. And wholesalers serving small businesses did not sign up, and most Amazon Business sellers did not sign up to accept invoices, limiting the amount that some of the marginal business owners who signed up could spend. .

It is clear it is mandatory because when given a choice Amazon sellers said, “No Thank You”.


#27

I think you just nailed it!
Amazon will convert as many buyers to “Business Buyer” as they can and offer terms to those with acceptable credit. They may even use 3rd party to factor the invoices and save the 2-3% on the credit card fees. On the volume they are doing, it’s a nice chunk of change.
And the 3P Sellers are the ones “waiting to get paid” on large percentage of the cash movement.

Pretty brilliant from Amazon’s point of view.
You and I and most of us 3P masses will just grunt and bear it.


#28

Getting ready to leave the platform. This is a final straw, Amazon. Reconsider this please.


#29

Blockquote
It’s been my experience that any customer who bickers over the terms are the ones that don’t pay on time or at all. Every. Single. One.


#30

Business sales account for 30% of our sales, so leaving the program is out of the question. We are just going to adapt.


#31

The “Pay by invoice” option has been enforced on Amazon Europe for more than half a year if I remember it properly. You can’t cancel the orders, you will not see any warning about the sale being “Pay by Invoice”.

On the transaction view, these payments show as unavailable with the availability date more than a month after the order date. So the buyer receives an item without paying for it

I even received 1 chargeback (Amazon funded) for one of these unpaid orders so the business buyer got a free item.

And yes, it is not possible to opt out. There is absolutely no notice on the order page telling you that you will not receive your payment immediately. If you sell thousands of items, you may not notice the invoice payments at all, but I can imagine that this will cause trouble for sellers who sell only a few items and need the payment to pay their bills etc.


#32

I’m worried about someone requesting a return before ever having paid for the item. If they are net 30 and request a return on the 29th day, I’ll be out 2 shipping charges and will get a used item returned to me without ever getting a penny for the order in the first place.

This just sounds like a great way to rent an item free for 30 days. No fear of restocking fees because there’s no refund. Claim not as described and pay no shipping. Zero risk.

Yea, great idea.


#33

According to how I read the information on Amazon, ALL sellers are or will be in June, in this program. NO opting out. The only options here are for the business buyer to opt in or not and I suspect that would be with each and every order.

Stupid idea. This should be a sellers prerogative whether to give terms or not, and why should we have to pay to get our money at the same time we normally would just because business sellers don’t realize what this does to a small business? As someone else mentioned, I’m not sure even how to do the bookwork as I am set up for immediately payments, but if someone buys with terms on Jan 31 then they have until March to pay for the item.

I suspect that Amazon is going to have lots of fun collecting the money as well.