The recent launch of the ‘Pay by Invoice’ function on Amazon Business in Amazon.com has attracted controversy and concern from merchants who worry that the new service will cause smaller companies problems with cash flow.
‘Pay by Invoice’ means that registered organisations can buy something and get delivery as normal. But they don’t need to pay immediately. Customers are issued with an invoice and the terms of payment. The due date and payment information are included on each request for payment. There is an opportunity to encourage payment more swiftly, before the due date, by offering a discount.
One consulting firm that helps marketplace sellers on Amazon says that this new service will have an impact on merchants who rely on swift payments to keep their cash flow working well.
Cash is always tight and challenging for small companies. 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 at worst could put them out of business. 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.
– Jerry Kavesh, CEO, 3P Marketplace Solutions
Amazon Business is a fantastic opportunity for merchants. It opens up Amazon purchasing to big business and institutional buyers, even public bodies, and the likes of charities. These are organisations that need different ways of settling up with sellers. And invoicing is a typical mode with such shoppers: they have systems that are well-established to deal with payments that way. And merchants are right to be hungry for their spending power.
But perhaps more flexibility would make Amazon Business, specifically when it comes to invoicing, more attractive to merchants. Are you an Amazon Business user and how do you deal with the ‘Pay by Invoice feature’?
One Response
We have already had this happen on a couple of FBA orders in the UK. The order sits in open invoices with a payment due date one month after the order is despatched.