In e-commerce, you have your eye on a variety of metrics. Revenue. Sales volume. Profitability.
But most sellers would agree that none of these matter to your business’s long-term growth plan quite like cash flow. In short, Wu-Tang Clan said it best: “Cash rules everything around me.” 💸
Without positive cash flow, it’s all but impossible to achieve your growth goals. And for sellers with a significant presence on Amazon, the issue of cash flow is a big one.
Amazon’s payment schedule and payout guidelines are, to put it gently, kind of a pain. There’s nothing more frustrating than making a sale (win 🥂) and then having to wait weeks to get the money from that sale.
So how long does Amazon hang onto your funds and how is that period determined? Let’s dig into the details, and explore five ways to get your cash sooner.
All About the Amazon Delivery Date Reserve Policy
- Amazon’s Base Reserve Policy and Account Level Reserve
- How Amazon’s Delivery Date Reserve Policy Impacts Your Business
- 5 Ways to Get Paid Faster
- Healthy Cash Flow on Your Terms
Amazon’s Base Reserve Policy and Account Level Reserve
Why do Amazon sellers see such a long delay between making a sale and receiving the profits?
In short, Amazon has a conservative payout timeline to hedge risk and protect the parties involved in each transaction.
For most sellers, Amazon’s payment schedule requires the funds from a sale to be held in reserve for a period of time to make sure you actually deliver the product that the customer paid for.
This built-in delay is intended to protect you from liability, your customers from fraud, and Amazon from unnecessary administrative work resolving issues and disputes.
What Is the Amazon Account Level Reserve?
Amazon’s seller account level reserve is a chunk of money reserved to cover potential chargebacks, returns, refunds, or guarantee claims after a customer receives your product.
Seeing these funds reserved in your account, while frustrating, is par for the course when selling on Amazon.
Your account could have a reserve for any of the following reasons:
- You’re subject to delivery date-based reserves (more on this below)
- You have open A-to-z Guarantee claims
- You have chargebacks from the past 90 days
- Your seller performance fell below benchmarks
- Your account is under review
- Local regulations require Amazon to withhold income tax from you
Before this holding period existed, scammers took advantage of the system by selling high volumes of inventory with extended shipping times — then collected payments and vanished before customers could complain that they didn’t receive their products.
The Amazon Delivery Date Reserve Policy
Amazon’s base reserve policy impacts how much your account level reserve is and how long it’s held. In summer of 2023, Amazon informed many Europe-based sellers that their base reserve policy would be changing to a Delivery Date-Based Reserve.
Previously, many of these sellers’ reserve periods were based on the shipping confirmation date. After the changes take effect, the reserve period is based on the order’s delivery date.
Most sellers can access funds seven days after the order has been delivered to the customer.
What does this mean for affected sellers? Unfortunately, it means you may see an even longer waiting period before you can access the cash from your sales.
How Amazon’s Delivery Date Reserve Policy Impacts Your Business
Amazon explains that the number of days funds are reserved is based on an “assessment of your overall risk and history performance, with the default being 7 days after delivery date.”
In most cases, the change should tack on about seven days to sellers’ reserve periods. However, Seller Central users have been quick to point out that this additional seven days extends their already inflated payout wait times.
While the delivery date-based model has been Amazon’s worldwide standard for seller accounts since 2016, many sellers for whom this is a new policy are lamenting the change.
User Langley_Projects, who has been selling on Amazon for 12 years and has had a delivery date-based reserve for the past 5, explains the impact:
From our experience, it is normally 14 days before money becomes available for disbursement, and then you have to wait 3-4 working days for the money to hit your account, so depending on how that works with weekends it can be 20 days before the money is received from point of sale, so that is roughly what you need to budget for in the cashflow. We regularly see up to 100k owing from Amazon between reserved funds and monies in transit. It then gets worse when you get bank holidays, as you have to add these into the equation with them not being working days, we saw a large jump over Easter when there were 2 Bank Holidays in a 4 day period.
These long reserve periods can result in a vicious cycle of waiting to secure more inventory until your payout — and losing out on sales in the meantime.
While announcements from Amazon describe the policy transition as a “one-time cash flow disruption,” experts estimate that more than 33,000 businesses could face cash flow challenges.
Plus, the increase in your typical reserve period will be permanent. You’ll need to make long-term adjustments to your financial strategy to accommodate the new timeline.
The change couldn’t have come at a worse time for sellers in the throes of stocking and prepping for Q4 sales. 😵💫
5 Ways to Get Your Amazon Payouts Faster
This change in the reserve policy is unavoidable. However, there are some strategies you can use to get your Amazon payouts as quickly as possible.
1. Ship Your Items as Soon as Possible
It’s not rocket science: The sooner you ship a product, the sooner it’s delivered — and the sooner you’ll have cash in hand. Prioritize shipping quickly after an order comes in, and always confirm shipments in Manage Orders.
2. Provide Valid Tracking Numbers
Make sure to provide valid tracking information on all packages. Not only does this help you see your profits faster, but it also keeps your valid tracking rate (VTR) healthy. Amazon requires a VTR of at least 95% to avoid selling restrictions.
3. Use an Integrated Shipping Provider
Amazon encourages sellers to use integrated carriers to ship. When you use one of these integrated carriers, Amazon uses the actual delivery date of the order rather than the latest estimated delivery date. This can shave several days off your reserve period.
Integrated carriers include:
- AAA Cooper
- ABF Freight
- Asendia
- DHL
- ePost Global
- Estes
- Estes Express
- FASTWAY
- FedEx
- FedEx Freight
- FIRST MILE
- First Flight
- OnTrac
- Pilot Freight
- Professional Couriers
- Raben Group
- RL Carriers
- Sendle
- South Eastern Freight
- UPS
- UPS Freight
- Watkins & Shepard US
- XPO HB
- USPS
4. Use a Faster Shipment Speed
If your lowest-cost shipping option is taking weeks to arrive to the customer, consider alternative carriers or faster methods.
While faster shipping usually costs more, you may find the tradeoff is worth it to be able to use the proceeds from sales sooner.
5. Get Advances From a Funding Partner
Sellers have been grappling with long Amazon payout periods for years. And this challenge hasn’t gone unnoticed.
Today, funding partners specializing in e-commerce offer Amazon revenue advances with flexible rates and terms to help you access your Amazon sales faster so you can get right back to investing in your business.
“You don’t know what’s going to happen down the road. And for us, we love having the flexibility of saying to our financing partner, ‘Here’s what’s happening. How can you help us?’” says Christopher Koop, CFO at CROSSNET.
Brands like Icelandic Glacial Water, Diamond Whites Aligners, and more are breaking out of rigid payment schedules and creating their own financing strategies customized to fit their specific needs.
Healthy Cash Flow on Your Terms
When you’re focused on growing your business, a few weeks’ delay in cash flow can mean the difference between jumping on the next big opportunity or watching your competitors pass you by.
If Amazon’s payout policies are a perpetual headache for your business, it’s time for a new approach.
At SellersFi, we know e-commerce funding because it’s all we do. Our solutions are designed specifically to tackle your biggest challenges.
Check out our suite of funding solutions purpose-built for e-commerce growth, so you can have the capital and cash flow to focus on scaling your business.
