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Monthly invoice amazon for small businesses

hey what's going on guys what has happened in YouTube and thank you for tuning into rules for rebels I wanted to share an article with you guys today it's about a new Amazon policy that's being rolled out called paid by invoice and the way that Amazon is kind of rolling out this invoicing to larger businesses is really being done on the backs of sellers and sellers are the ones being expected to essentially finance these payments which can hurt small businesses so a lot of sellers are outraged about this in the grand scheme of things I don't think it's going to affect a lot of sellers basically what's happening is Amazon is gonna give large businesses and there's gonna be some type of accreditation or credit check or something like that but Amazon is gonna allow large businesses to have a 30 day invoicing period 30 day terms to pay now what PayPal actually offers something similar to this right so if you guys ever buy things on eBay or even as sellers on eBay you guys may have run into somebody using this as a seller you probably don't even know that the customer is using this but PayPal actually has a credit line when you checkout from PayPal sometimes we'll say do you want to not pay for I forget what it is 30 days 45 days 90 days 6 months whatever it is actually now that I think about it I think it's 6 months no interest a long time ago years ago I had a customer place about $1,000 order they use this PayPal line of credit I think we wound up having to refund his order for some reason and it wound up actually kind of causing a bit big headache for him because it was done through credit it took him a while to get his money back but the way the way PayPal and eBay credit system works is basically PayPal or some third party company is issuing the credit so the seller gets the money instantly if you buy something from me and you use PayPal's credit line I'm given the money for the purchase instantly and the whole credit thing is between you and PayPal and you have six months to pay them off well Amazon is trying to do something similar except instead of Amazon being the one issuing the credit you the seller are the one who's gonna have to wait an additional 30 days to get paid so Amazon typically pays out every two weeks with my account we get paid every thirty days I'm not sure why it has something to do with volume but we already wait 30 days to get paid now Amazon is gonna give customers another 30 days on 30 day credit terms so there's 30 days before the company has to pay and then I'm assuming there's gonna be another 30 day period for my particular business where we'd have to wait to get paid out for most of you guys it's probably a week or two so you'd probably be looking at 45 days but this is incredibly unfair that Amazon wants to offer credit to larger businesses to help grow their business but again instead of them being the one to lay out the money in finances you are the one laying out the money now one problem or one question I had is if these businesses don't pay are you on the hook because the Amazon decided to issue credit to a company and apparently Amazon will if there's late payments or a company doesn't pay Amazon will pay you but it still just seems really really unfair that Amazon is growing their business on the backs of sellers now in the grand scheme of things is this gonna affect a lot of small-time Amazon sellers probably not unless you sell items that a business is gonna use so I mean if you're selling spatulas or camping hammocks or you know Bluetooth headphones or speakers or whatever else there's probably not a lot of businesses who are gonna be buying things from you but if you sell 30 up labels if you sell tape if you sell poly mailers if you sell like packaging goods or really any supplies that might be used by a business potentially this could affect you so I'm kind of curious to hear hear your guys thoughts on this go ahead and drop a comment in the comment section below personally I'm not a big fan of it I think it's kind of a shitty way to kind of run your business Amazon has more than enough money they really don't need to put this on small-time sellers and small businesses but you know yet another you know MMI shock that Amazon is basically doing something to benefit themselves and hurt sellers absolutely not I mean that's what Amazon does you know it's yet another reason why you should never rely on Amazon why you should never put too much control in Amazon's hands why you should never build a business on Amazon or really any third party for that matter so that's really kind of everything in summary I'll go through here and read the article for anybody who wants to kind of hear the whole thing so some Amazon sellers are outraged over a new payment policy designed to attract more corporate buyers Amazon recently rolled out a new payment policy called pay by invoice so business customers can buy in the marketplace and have more time to pay their bills some sellers are worried that waiting 30 days for payment instead of getting paid every week or two will put them in a cash crunch the new policy means corporate buyers can shop on a broader marketplace and not be restricted to Amazon business now two more things I wanted to point out about this so I've talked before about how PayPal has done rolling reserves to me at one point me and my partner our company had over a hundred and fifty thousand dollars tied up in PayPal reserves and that meant that we couldn't order inventory so what we wound up having to do with raise prices we also fortunately had a couple understanding suppliers who had been doing business with for a while who offered the front as inventory and kind of helped us through that cash crunch and we got through it we probably did lose a little bit of business but that absolutely sucks having to go through this here's another problem I don't trust Amazon so at one point in time I think Amazon's only held my money one time PayPal has done it more than that but me and my partner had a it was probably at the peak of our Amazon business I think we had about $47,000 in pending payouts Amazon wound up freezing our account sending us a form letter that didn't really explain why whatsoever they took away our contact Amazon button so I had no way of initiating a call or I think back then even at chat I had no way of initiating any contact with them 30 days went by 60 days went by I forget why 90 days was the countdown I think they they said after 90 days the money would be released anyhow I think 93 days came I started bombarding Amazon's executive offices and even sending letters to Jeff Bezos personally you know kind of ranting about this and what's going on and if I'm not mistaken that they're considered a payment processor or money transmitter and I believe what they were doing even if they did release money in 90 days violated like money transmission laws and things like that but anyhow at the 93 day mark I started sending in letters to them within a couple days of Amazon getting a few letters from me I actually did get an email from executive services they released the money never really told me why it was how old or why it was taken but they didn't close my account my was still in good standing and allowed to sell so the whole thing made absolutely no sense but they held 47 thousand dollars of our money for no reason and just kind of a funny apart to that story I actually wound up contacting a law firm out in Seattle to to try to get my money back for me and to my surprise they they reach back out to me and said we're on retainer for Amazon we can't help you out so unfortunately I did get my money back but you know I never liked having too much money tied up with Amazon or anybody for that matter but moving out of the story Amazon is trying to lure business buyers onto its fast-growing marketplace offering them extended periods to pay for things like heavy equipment and office supplies sellers fear the change is coming at their expense in an email to sellers earlier this month Amazon it said that its third-party merchants which which utilize the company's fulfillment centers and logistics system would be part of a new policy that gives qualified businesses 30 days to pay their bills for consumer products sellers are used to getting paid within a week or two by applying the pay by invoice service to the broader marketplace corporate customers no longer have to rely on the specialized Amazon business to get the benefit of longer payment periods starting August 8th products from the general marketplace sellers could be automatically could become automatically eligible for invoicing purchases ing to the email which was viewed by CNBC so this is not something that you have the ability to opt out of right like I think that would be better if Amazon said look if you guys want you know more businesses to shop with you this is a great opportunity to make yourself more attractive to corporate buyers but you know if you can't you know stand the the cash flow issues that this may cause you have the ability to opt out well Amazon is not letting you opt out everybody is automatically in Lin lengthening the cash payment cycle could create a cash crunch for sellers who rely on speedier payments to buy inventory and fund their operations said Jerry kvish the CEO of 3p marketplace solutions a consulting firm for Amazon Marketplace sellers cash is always tight and challenges for small come and challenging for small companies said kavik this policy could put sellers in a cash bind where they may not be able to pay suppliers and employees which is problematic at best and worse could put them out of business an Amazon spokesperson divided declined to provide comment for this story and here's another thing I know a lot of you guys are probably thinking well you know alright what kind of business are you running if you're really that cash-strapped but keep in mind like when you're ordering from China which a lot of people do you know it may take your shipment 30 45 days to make it over here to the States plus production time so you know it's not necessarily as if you can get money freed up and have new product in a week like sometimes there might be a month six weeks even two months downtime between orders so you're having to pay your supplier and then you may have to wait you know 30 45 60 days to actually get that inventory and so this really could cause problems sales growth risks slower payments Amazon told sellers in the email that this change is meant to draw more corporate buyers to the marketplace and could open up a new revenue channel for customers who wouldn't otherwise shop with them sellers that want cash faster than 30 days can pay an additional 1.5 percent of the invoiced amount paid by invoice represents a new growth opportunity for sellers encouraging Amazon business customers to use Amazon marketplace as a primary channel for b2b purchases Amazon wrote but sellers are skeptical one seller who asked to have his name withheld out of fear of retribution said Amazon should have given merchants a choice to participate because cash management is such a sensitive part of their businesses Amazon is using you the seller to finance their growth of its cusp of its business customers the seller said Amazon first announced plans for the new policy May sparking debate across the seller forums as to whether it would be a benefit or a hindrance one merchant wrote this might work for big distributors with enough budgets to cover terms but for me or any small business owner another poster said just a single order for $5,000 of gear not paid for 30 days is enough to put many small businesses in a cash flow pinch with their suppliers who are not going to wait 30 days more anxiety Abraham chromoly founder of XP strategy a marketplace consultant said the new payment program has created more anxiety for sellers and actual problems he noted that qualified business customers account for a tiny percentage of overall volume additionally Amazon is taking on some of the risk by guaranteeing payment on late or default invoices Amazon wants the sales pie to be bigger Kamali said the new policy could also for sellers would become smarter with their cash said chris masters founder of the bobsled marketing marketing a firm net helps companies sell in the marketplace amazon's weekly and baile weekly payment cycles are much more generous than some big-box retailers which typically asked for 60 or 90 day terms she said some sellers have had become reliant on these fast payments and don't have a cash flow model to be able to accept these terms master set so here's one interesting thing to me there is nothing fast about amazon's payments right like it's not terrible but if you saw on PayPal unless you have a brand new account you can transfer that money to your bank what I think now it's instantly if not maybe two to three days at the most with a merchant processor like first data or stripe or Shopify payments or whatever else if I bet you anything I batch out by five o'clock I'm paid out on the next day worst case scenario I have it 24 hours after that so I mean Amazon has always been kind of a slow payer with I mean my I've never had seven day terms might have always been fourteen or thirty days so in my experience I wouldn't consider Amazon to be fast by any means and this is just lengthening that time but keva said this is yet another hurdle for small sellers who already survive on thin net profit margins of 2% to 5% it's going to potentially make it difficult for some to stay in business you said this new policy at least doubles the cash a small seller needs to have on hand in order to operate which many small firms simply do not have and do not have the ability to access cabbage said so excuse me in the overall scheme of things again Amazon corporate customers are business-to-business customers they make up a very small percentage of Amazon buyers secondly unless you're selling office supplies or something that a business uses you're probably not ever gonna have somebody come by your item you know like I said if you're selling spatulas or camping hammock sir you know paddleboard pedals or whatever else I highly doubt any business is gonna be buying from you but you know if you're like I said if you're selling bubble mailers or something else this probably will affect you again curious to hear you guys thoughts on this drop a comment in the comment section below let me know your thoughts if you enjoyed the video give it a thumbs up if you're not subscribed hit that subscribe button below and we'll catch you on the next video guys