Invoice Finance for Amazon sellers
Last year, e-commerce giant Amazon introduced ‘Pay by Invoice’, where Amazon sellers can now facilitate friction-less B2B transactions, where corporate customers receive goods before paying at the end of their term.
This incentivizes customers that prefer to pay after receiving the goods to transact more on Amazon. This is currently by invite only, hence not all Amazon sellers are subject to this but on the surface, this seems mutually beneficial to all parties involved — corporate customers, Amazon sellers and Amazon.
However, as an Amazon seller, you will not receive payment until the customer pays, where it can take up to 30 days after delivery of goods. Amazon sellers are protected from the risk of default from these customers as Amazon will automatically repay the seller’s accounts in the case of a default or late payment. This process could take up to 45 days, which could negatively affect an Amazon seller’s cash flow.
Defaults by corporate customers which leads to delay for Amazon invoices are unpredictable, and the negative effect on an Amazon seller’s cash flow may reduce the profitability for them. A solution for this that Amazon sellers can consider is to opt for invoice factoring or invoice financing.
Invoice financing is a process where an invoice seller receives cash advance raised at a discount from the invoice and when payment is received from their customer, repays the financing company. With invoice financing, Amazon sellers can receive the cash flow for individual invoices to manage their inventory. This is especially true for Amazon sellers that have opted for the Fulfilled-by-Amazon (FBA) option as inventory management is one of the biggest variable. These sellers should maintain an optimal inventory level to avoid overstocking by tying up capital in inventory, under-stocking and losing potential sales.
Hence, Amazon sellers looking to maximise profits in the event of a payment delay or other circumstances that may negatively affect working capital should consider invoice financing.
At Populous World, we strive to help sell your amazon invoices to achieve higher profitability with our flexible invoice discounting, where invoice sellers can choose to discount individual invoices without committing to a long-term contract.
For more information, contact our funding specialist, info@populous.world
Jason Tuang MBA, CA and Lou Chan, Populous World.
