Global Online marketplaces such as Amazon, Alibaba, and Etsy have become an important platform for small and medium-sized ecommerce businesses to scale and grow at a sustainable rate. In 2019 alone, 57% of worldwide online sales were made on such marketplaces. But, a huge barrier in running an online ecommerce business through a marketplace is a delay in payments. Payments on any marketplace could take anything from 15 days to 45 days. In business, time is money and there is a way to beat this delay and save your money — Qashflo. Before we help you with the solution to achieve early marketplace payment, let’s understand the problem first.
How do marketplaces pay sellers?
There are several Steps:
Step 1: Buyer pays the Marketplace Payment Service Provider, in charge of collecting and analyzing the buyer score.
Step 2: When the transaction is approved, the order money is kept into the seller’s wallet under marketplace control, the seller can ship out the order.
Step 3: Marketplace check the status of the delivery, approve the payment to the seller
Step 4: The money is released during the Payout period.
Marketplaces usually have a 7-day return window. Your money will only be credited in the marketplace’s next remittance cycle once these 7 days have passed. Amazon has a remittance cycle every two weeks. If you miss a remittance cycle that falls within these 7 days, you will have to wait for at least another 14 days to receive your payment, which could take your waiting period up to 21 - 45 days. Amazon provides loans between payment cycles through Amazon Lending, but these loans are on an invitation basis and only a few sellers can get it.
Generally, seller’s get their money between 15 up to 45 days after the order.
Let us now find out the benefits of early marketplace payment that you miss because of this long waiting period.
Why do you need quick marketplace payment for your daily sales?
All the advantages of receiving payments quickly boils down to one factor — daily working capital. Here’s how —
Instant benefits of receiving payments early from marketplaces
1. Stock renewal
Suppose you put 1000 products for sale on a particular day. You have to wait for at least 21 days to receive payments, which you can then use for further production and stocking. Stocking and selling within the 21 days in between would require additional funds, and additional tracking of each stock’s payment cycle. 2-day payments can ensure a good amount of daily working capital for ecommerce businesses for keeping up with rising demands.
2. Increased visibility & sales
If you are able to produce on a more regular basis with your healthy daily working capital for ecommerce, you can also put products up for listing more often on marketplaces and your visibility on ecommerce platforms increases. A flourishing system of regular sales and purchases can be set up if you have a daily working capital in your hand.
3. Other working capital solutions
If you receive early payment from your marketplace sales, you can allocate this to routine working capital expenses. These include wages, maintenance, and even short-term marketing.
Long term benefits of receiving payments early from marketplaces
Maintenance of a good daily working capital for ecommerce businesses can also help in the long run.
1. Increased turnover
By easily multiplying sales with increased production and increased supply, your ecommerce turnover can increase much more than it would with delayed payments.
2. Expanding product offerings
Once you have a good daily capital flow, you can focus better on diversification. You can improve both the quantity and quality of products. You would be free to explore new categories and features.
3. Better negotiation with suppliers
Suppliers usually offer a 30-day window for payments. If you pay them much earlier, you can negotiate for better rates and discounts. If you pay them later due to delays in receiving marketplace payments, negotiation becomes difficult.
4. Keeping investors happy
Investors always have an eye on the daily developments in your business. Early marketplace payment leading to greater working capital could earn you a good reputation with your investors. Investors are the ultimate driving force for developing your business.
To earn the benefits of quick marketplace payments, use a specialized service that can provide you payments in D+1 days. This specialized service, Qashflo, is eligible for all kinds of orders and most of the popular global marketplaces. It also has a quick registration process and a single dashboard for managing all your data.