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in today's video we're gonna cover the last steps of the supplier negotiation and payment process and I'm actually going to cover the document and by the way I've attached this document below in both of pages and a Word document format whether you're using Mac or PC and what this is is a purchase order agreement as you can kind of see right here and what a ports a purchase order agreement is is a document that just ensures that both you and your supplier are on the same page in terms of product costs production time shipping payment terms all that information just basically recapping everything to make sure that everything's gonna run smoothly and that you're both in agreement and understanding okay so that's the purpose of this document the purpose is not to protect you in court if anything were to go wrong you know god forbid but yeah so this won't have any kind of legal standing right although there are some portions that'll sound kind of you know have some legal jargon and that is just you know to come across professionally you know and by the way a lot of sellers do not especially a lot of new sellers do not use the purchase order agreement when kind of finalizing payment terms with the suppliers so you're gonna come across as much more professional it's definitely I mean this alone for you just to go through this even if you weren't to have your supplier sign this but just for yourself is really great to make sure you recap and cover everything that you need to and make sure everything's good to go in terms of I'm getting your product you know purchasing your product setting it in to Amazon and the kind of that entire process okay so yeah very very important I use this for all of my with all my suppliers and again it's gonna put you much further ahead than 90% of other Amazon sellers alright so all this kind of run through this document hopefully relatively briefly I know it's not gonna be super fun but hopefully it will be very very helpful to you so we'll go ahead and go through that now as you see right I have a lot of kind of supplier name your company enter date etc so you'll have to kind of take this document and I'm edit it to your specific needs right into your relationship and in contract with your supplier right so there's gonna be some parts that may be missing some parts that are unnecessary right so it's up to you to kind of delete or have those parts that are again it completely depends on your specific situation so so yeah I have a lot of those kind of points those parts here that it's kind of fill in for yourself all right so purchase order agreement your company right known as first party agrees to enter into this purchasing agreement with supplier company name known as second party this agreement is based on the following provisions production second cup the second party agrees to produce the following goods X quantity of Y products right so you know 100 books if you were producing books for whatever reason second party will assemble fill and secure a you know whatever your packaging is whether that's plastic bag you know box box with shrink wrap etcetera multiplied by the number of packages and then a labor cost of you know whatever that labor cost is again the supplier will give you the labor cost for you know filling and securing whatever bags or boxes that you have so you'll just enter that in here just kind of recap or restate the price that they quoted you will be paid by the first party to cover assembly costs and then each set they're sorry each set should include X so that could be you know thank you card and ribbon and shrink wrap and whatever the kind of any extra any extra things really that each set should include you'll go ahead and enter that in if not you can go ahead and delete that and then a UPC code will be provided by the first party and print it and attach by second party right very straightforward and we already cover that in previous videos and if the plastic bag and this is important if the plastic bag has a 12 point 7 centimeter opening or larger measurement flat they should have a suffocation warning either printed on the bag itself or attached as a label right so it's American law that if you have a plastic bag twelve point seven centimeters or larger that you must have a suffocation warning okay so you want to make sure that you have that I will say there are sellers who don't use this and they kind of get away with it but again I definitely recommend like I said with anything abiding by the law is usually a good course of action so I definitely recommend that and make sure you have that in there X units per case right there's a certain number units that are gonna fit in each case right and then the total number of cases that you're sending to Amazon again kind of recapping what we covered in the shipping in the kind of shipping plan and shipping modules then the second party agrees to the cost of so the total cost right of X US dollars you know per package cost and then the total number of packages very straightforward and then production time right because you're gonna ask your supplier right how long is it going to take to produce this many units right a thousand years two thousand seven fifty whatever it is how long is it going to take to produce and they'll tell you and usually it's around thirty days however this definitely varies it'll be shorter or faster or less you know shorter or longer depending on your specific product but yeah it's around thirty days so you can kind of enter those days 30 days we enter it in here your production time for the product name exceeds the exceeds the agreed-upon production time next days after payment is confirmed the first party requires advanced notice of at least three days in order to respond appropriately if production time is delayed for more than three days etc etc and really the rest is just kind of like that legal jargon that I kind of mentioned I mean kind of read through that but just basically act in good faith you know don't delay I just do you know let's just make sure that we both do what we what we agreed to do okay well boy I won't try to bore you with the details I'm sure I'm already boring enough inspection so you want to include the section weather and it like I covered in a previous video you can opt in for an inspection company or not to kind of go through your products and make sure there's no defects and everything's okay whether you are using a third party inspection service or inspecting it your own home or the third option which is what I do most often I make sure I get you know kind of go through that here but a lot of images to make sure that everything looks good to go and I get those for my suppliers so whether you're using an inspection service or not you want to include the section alright so the first party reserves the right to eat third party inspection so you do have that right of course and the second party agrees to an internal inspection required by the first party the points of inspection required are and again you'll change this wording whether it's an internal inspection or if this is an external expect inspection by company X right the inspection service that you go with right but you want to make sure you get pictures of each product style as they're being manufactured as they're being assembled pictures of the first case being loaded with a box open and then picture of the full shipment in all the cases right so you and you want to get multiple pictures of each and I really really stress getting images really when you get enough images I kind of eliminated the need for an inspection service company in my opinion however again if this is your first time I may recommend that right that you I'm getting an inspection service or at least the very least right get lots and lots of images okay and that's the inspection section next we have shipping again all of this is priority covered with your supplier you're just kind of recapping at this point so shipping will be handled by a third party forwarder but obviously because they're not gonna ship the units themselves you know they'll either work to kind of help you find a forwarder or you'll find it for yourself but um shipping will be handled by a third party forwarder but second party agrees to deliver all cases to the nearest port which will later be established by first party the second party also agrees to print case labeling in accordance with the list below box dimensions and weight may be modified after accurate measurement of such so you want the product type so whatever your product is like books right we'll say randomly it's it's books okay case quantity so you know the quantity of cases right the number of cases you want to make sure may be in China the gross weight in kilograms and the box dimensions in centimeters length width and height right now just the length in the width but you need the full you know volume box dimensions rights as three dimensions confidential information so we're almost done actually it's really not that complicated but you know we'll it just kind of helps you put all your thoughts together in the confidential information section I'm not gonna read through it all but basically that they agree to not either kind of steal your product and start selling kind of the product that you developed in your private label product on Amazon and that they also will not share this with anybody else any other manufacturer any other seller etc right just kind of keep your information confidential and then finally the payment and approvals section right especially the payments section this may be the most important section and the section you probably have the most questions about right because it is very very important when you're sending money overseas to a foreign country that you may have never done business with before right and it's really not scary as it sounds and really should be if you follow the steps I've laid out and these steps as well so for payment at this point you've already agreed to a certain amount of money what you haven't agreed yet is when that money's going to be paid and how it's gonna be paid by what platform right it's not obviously gonna be in cash you're not gonna carry cash over to China probably not so it's gonna be in some other kind of method so I'll cover those both now first when I start on Amazon FBA and I was ordering in paying for units I would usually do fifty percent upfront before and then fifty percent once production ends that I do not recommend that and I don't personally do that anymore the reason is um you lose a lot of leverage right money is powerful money is leveraged so if you pay for your entire order before they get shipped once they get shipped you know the supplier in theory really doesn't care right and a lot of times I honestly do like they want because that ultimately you know they could lose return business if anything went wrong but you know they have the money it's it's a lot easier for them not to care I should say okay it's a lot easier for them not to care when all the money is has already been paid so here's what I recommend okay you want to pay in kind of three kind of installments right three different processes right so the first step of the process right is to pay 30% of the total amount before production starts they need something right they're not going to produce all your units and then say hey we produce your units and then you're like oh yeah we don't want them anymore by and they're like you know that wouldn't be good business for them that's a risk to them so you want to make sure you pay 30% of the total amount upfront before production all right next you want to pay 40% after and this is all again this is my opinion this is what I found personally works best and there's a lot of big-time sellers meaning multi-million dollar per year Amazon sellers that do the exact same strategy here and it's actually kind of where I learned this strategy I'd network with a lot of these sellers so the next you want to pay 40% of the total amount right so this is now a total of 70 percent the next 40% after production ends okay so now you've paid 70 percent all right so you have 30 percent left that remaining 30 percent in my opinion right this is what I do this is what I recommend you pay that once the once the the products have been cleared through US Customs okay so once it cleared through customs they're on their way to Amazon's warehouse you know you can't really you know withhold payment if hey we want to make sure it gets you know Amazon stocks it correctly and all that because once it gets into the Amazon er it's on its way to Amazon it's kind of hotter to their hands right so it's really good to kind of pay the remaining amount and pay it all once it's cleared customs and that 30 percent which is still a decent amount that's almost a third it's gonna be very powerful leverage in case and hopefully duh hopefully nothing goes wrong right and a lot of times you know everything runs perfectly smoothly the majority of the time but in those occasions that something might go wrong or delay or whatever that 30% actually gonna help you right and you can use that as leverage and it's basically going to get the supplier to care a little bit more okay so that's kind of the reasoning so just to recap 30% before production 40% right after production and then 30% right after the products clear customs okay that's what I recommend and you might get some pushback from your supplier but you can always respond and say hey this is our first time doing this we we know you know we feel that this properly kind of allocates the risk out or however you want to kind of word it you know but one thing I really like to make clear is this is our first order we want to make sure it runs well if things run well you know we can always renegotiate on future orders that we'll be placing with you right we're getting we're definitely if everything runs well and we sell well on Amazon which we definitely will we're definitely going to come back to you and in your reorder units and we're gonna sustain that long-term relationship with you that's always a really good point to bring up okay so there's that and there's this is this these are the terms that I have be firm on these terms it's very important again I used to run kind of 50/50 you know 50 before product production 50% after I didn't have any problems with that however again networking and talking to these multimillion-dollar sellers right who do it very different or did it you know a little bit differently and I've now implemented my own business this is now what I recommend right this is it's it's much safer gives you a little bit more power kind of throughout the entire production and shipping process so I'd be firm on that this is very typical again this isn't weird this isn't like oh this person needs special treatment they still like push back little bit because obviously they prefer they ultimately prefer 100% right up front but you know be firm on your kind of you know on your on your payment plan and say we can always you know renegotiate in the future however I recommend kind of having the same pattern timing for every time you order from the supplier and all your suppliers okay so that's kind of the money allocation and when you're going to kind of pay now the big question is how do I pay right like I'm sending money to China how do I do that safely and effectively and efficiently so there are only two methods of payment that I recommend one is PayPal and number two is Alibaba trade assurance wire transfer or really just referred to as Alibaba trade assurance those are the only two that I'd recommend and here's why so one with PayPal right so I'm definitely recommend using PayPal only and don't use anything outside of PayPal Uralla valve a trade assurance and especially for your first order do not use anything outside of PayPal in my opinion and here's why with PayPal opposed to other forms of transferring money there's a little significantly higher likelihood that if you send your money in with PayPal and and if something goes wrong or anything goes wrong you're able to retrieve that money later okay again it's not guaranteed and also hopefully nothing goes wrong right to where that happens but of course you always want to be safe and play it as safe as possible so PayPal is a really great platform to kind of do that right so so there's a lot layer higher likelihood of kind of casting your net out right like kind of you know putting your money in if something goes wrong you're there more likelihood of getting that back out opposed to like a Western Union wire transfer or other payment types okay with that being said so it is in my opinion the safest for you okay so it's the best option for you however there's also a currently I've been making this video there's a three percent fee associated with sending money over and again when you're buying a few thousand dollars worth of product right that three percent kind of adds up again if it's your first time selling I highly recommend PayPal even with that fee just take that into account and kind of you know you know account for that in your total product cost it's a three percent fee again at the making of this video I'm gonna double check of course you know before you before you go ahead and write that down but it's about three percent and again that 3 percent you know it's gonna help you you know keep your money as safe as possible and the best kind of transfer possible and then also I live off a trained assurance the benefit with that is it does not have the 3% fee in terms of the downside there's not really downside and here's what I mean by that so I've used to only use paypal right that's that so what a lot of Amazon and sellers will use you know when dealing with Alibaba suppliers however that 3% fee you know we had one of our suppliers say hey can we just you know use trade assurance we've already done business with you before you know everything's gonna go like you know you I hope you can trust us and I'm like okay like I'm gonna venture out and a few months ago I started using trade assurance had no problem started using with other suppliers had no problem so there's only a benefit because you know I didn't have to pay that 3% fee with PayPal right so I saved some money kind of in in that regard and you know Alibaba trade insurance you know is is marketed as being very safe and all that however like I said a lot of sellers and from a lot of research that I've done most sellers will use PayPal but I now find that a lot more sellers are starting to use trade assurance more and more often and even new sellers however the reason I'm not recommending it right because it sounds like a much better option so why would I recommend it I don't recommend it yet because I still don't believe it's as safe as PayPal and I really don't feel like I have or other sellers have really started using this enough and there's enough kind of really data collected from this for me to really recommend it I don't want to recommend anything that's gonna you know cause problems I'd especially will definitely not recommend anything it's gonna make you lose thousands of dollars okay right that is that would be I feel horrible right and I will not and have not done that throughout this entire course I want to give you the very best information so the safest option by far that I would recommend is PayPal and pay the three percent fee if you really don't want to pay the three percent fee and let's say you do some additional research and you're really finding like oh well this new seller is use trade insurance that they didn't have a problem this this seller didn't either and you and you feel like you you don't want to move forward with Alibaba trade assurance the wire transfer with them then you can go ahead and do that right I'm not you know I have no power in terminating you from that however it's not as safe in my opinion banned PayPal or at least it hasn't improved to be a safest PayPal so you kind of use it as your own risk but those are the two options I started off using PayPal I still use a little bit of PayPal but I'm now moving more to Alibaba trade assurance those are the two options those are the only two options however that I would recommend and hopefully that makes sense I know it's kind of all over the place a little bit but those are the two options I'd recommend again 30% you know upfront before production 40% after production and then 30% wants your products of clear customs all right then the final section very simple this agreement is entered into on X date 2019 or 20 or whatever buy your company and you know the supplier company name and then what I do is I just go ahead and I've I do this for a lot of my documents I've created a digital signature so I'll just type in you know like I'm handwritten signature generator online type in my name and then I'll just kind of copy and paste this in future documents but really doesn't matter enter in your name the date you'll save this document edit it you know make sure you sign the approval section and then you'll go ahead and send that over to your suppliers and make sure that they have it printed off they print it off sign it and then scan it back to you and they can either be they can honestly even take pictures of it if it's signed or you know they can scan it and then send it to you that way but make sure that this is I'm signed and scanned and documented right before you pay okay that's what I recommend this will help you know just going through this on your own it's going to help you really make sure that you have all the questions you need to answer I'm just going to help you you and your supplier both be on the same page so I hope this was helpful if you do have any questions of course as always leave those in the comments below and I'll get back to them as soon as possible I mean guys it's pretty much like free mentorship so you know use this while still have time to answer people's questions and you know if you did like this video be sure to give me a thumbs up below and hit the subscribe button because I have a lot of great videos on this channel and a lot more great content coming to you very soon and I want to make sure you are notified and take advantage of that as always thanks so much for watching and look forward to seeing you in the next video