Starting this week, eBay are starting to transition sellers to eBay payments and, for those with an outstanding cash advance, the question arises as to how to repay PayPal Working Capital?
It’s important to realise that up to the point you are migrated to eBay payments, you will repay your PayPal Working Capital finance with a percentage of your eBay (and website or other selling venue) sales. This won’t change until your eBay account is activated for eBay payments and funds cease to flow into your PayPal account.
“Your automatic repayments will continue until you move to eBay Managed Payments. Once you move, we will no longer see your individual eBay sales which means PayPal will not be able to take automatic repayments from those sales. If you have sales outside of eBay, i.e. on your independent website or in-store, PayPal will continue to take automatic repayments on those sales.”
Once you move to eBay payments, it is likely that insufficient funds will flow into your PayPal account in order for the percentage you agreed to repay your finance with to meet the minimum repayment amounts to repay PayPal Working Capital. Your minimum repayment amount may be 5% or 10% of the finance.
“Depending on what proportion of your total sales are made on eBay it’s likely that you may not be able to meet the required minimum repayment amount every 90 days and should arrange to make additional repayments to repay your PayPal Working Capital advance.”
You can currently make additional repayments via your PayPal Working Capital dashboard, directly from your bank account linked to your PayPal wallet, or from your PayPal balance. PayPal are also working on alternative repayment methods and will contact you once your business moves to eBay Managed Payments.
This opens up an opportunity for businesses when deciding how to repay PayPal Working Capital finances. I’m sure that PayPal would prefer you calculate roughly what deductions they would have automatically made from your eBay sales and repay your cash advance at that rate. However there appears to be an acceptance that in many cases this may be unlikely to happen and you could simply make the minimum 5% or 10% payment every 90 days.
This gives you the ability to stretch your existing PayPal Working Capital finance over a considerable period into the future should you wish to do so. We would never suggest you take liberties, especially as PayPal appear keen to develop alternative financing models in the future which you may wish to take advantage of – having a robust history of regular payments will likely stand you in good stead. However if you wish to manage your cash flow then, once you are migrated to eBay payments, some unexpected flexibility in how to repay PayPal Working Capital is coming your way.