What is the Invoice Payment Method? Invoice Payment Method Review

Pay By Invoice (PBI) is a new payment method introduced by Amazon that allows buyers to defer payment for their orders. It took effect for third-party sellers on August 8, 2018.

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How to use

Amazon Business buyers must go through some review before being approved to use the invoice payment method.

Collection cycle

Amazon says that "once the buyer's payment is complete, the payment for these orders will be credited to the seller's account's available balance no later than 7 days after the invoice is due."

Amazon also offers sellers an option to speed up payment (Get Paid Faster), but this is paid: sellers need to pay 1.5% of the total invoice order amount as a processing fee. If the seller chooses this option, he can get the order payment credited to the available balance of his Amazon sales account immediately after shipment.

set up

The order details page in Seller Central has a new "Payment Method" field. The "Invoicing" category below this field will display all orders paid by invoice, and a new "Payment Method Details" attribute will be added to order reports.

The “Expedited Payment” option will appear in the Account Settings page, and sellers can choose to select the “Expedited Payment” option through the new Account Settings page before “Pay by Invoice” is officially implemented.

Amazon’s Notice on PBI

Part of the original email from Amazon is as follows:

“As a seller on Amazon, you don’t need to do anything to make your products available for Amazon Business customers to purchase using the Pay by Invoice method. Your products will automatically become invoicable at no additional cost.”

“Amazon will handle all aspects of the invoicing process, including credit risk assessment, billing and collection activities.”

“For all pay-by-invoice transactions, Amazon will pay the seller within seven days of the invoice due date, even if the Amazon Business customer is late or defaults on payment.”

“For any invoiced orders you receive on Amazon, once the customer completes payment, your funds for these orders will be credited to the available balance in your Amazon selling account within seven days of the due date of the customer invoice.”

Pros and Cons of PBI Regulations for Sellers

Pros: Sellers may receive more large orders, thereby increasing sales, because the flexibility of "pay by invoice" can attract more Amazon Business customers to buy goods on Amazon. In addition, "pay by invoice" orders must be paid by wire transfer, ACH transfer and check, which can reduce payment processing fees for sellers.

Disadvantages: Not "pay by invoice" will lead to delayed payment, which may put pressure on the cash flow of some sellers. Amazon provides the "expedited payment" option, which allows sellers to receive payment after delivery, but sellers need to pay an additional 1.5% handling fee of the order amount.

Seller response

Amazon is trying to attract corporate buyers to its fast-growing platform by introducing a new payment method, Pay by Invoice (PBI), that allows corporate buyers to defer payment for items such as heavy equipment and office supplies, but it has also raised concerns among sellers that the change will come at their expense.

In an email sent to sellers in early August, Amazon said third-party sellers that use the company's distribution centers and logistics system will also be part of the new payment policy. The new payment policy stipulates that eligible business buyers can pay their bills within 30 days. But for consumer products, sellers are used to receiving payments within a week or two.

Jerry Kavesh, CEO of consulting firm 3P Marketplace Solutions, said lengthening cash payment cycles could create cash shortages for sellers who rely on faster payment methods to purchase inventory and finance their operations.

"For small companies, liquidity is always tight," Kavesh said. "This policy by Amazon will put sellers in a cash crunch and they may not be able to pay suppliers and employees. In the best case, this is a problem at best, but in the worst case, they may go bankrupt."