Amazon Vendor Financing: Q&A with Payability
When Amazon vendors enter the Marketplace for the first time they face a variety of obstacles including managing advertising efforts and dealing with increased competition from other sellers.
But according to Payability, a financing platform for mobile apps, publishers, and Amazon Vendors, one of the biggest Amazon seller financing concerns for startups going into large retailers (like Amazon) is the cash crunch that comes from rapidly increasing orders and long payment terms.
This delay in payment to the vendor can result in a limited cash flow to replenish inventory, and lead to slow growth, sales, and limited credit.
Even if the vendor’s sales are increasing – because of the lack of return to fulfill purchase orders, they will struggle with inventory replenishment.
Founded in 2013, Payability started ramping up their business at the beginning of 2015.
The financial service was created as a solution to cash flow problems that their advertising clients were facing. What they quickly realized was that publishers couldn’t grow their business waiting months to get their sales revenue.
Payability has since expanded beyond its initial publisher and mobile app clients to provide the same accelerated payments to startups selling on e-commerce sites like Amazon.
How do Amazon vendors benefit from Payability’s finance solutions?
Payability offers faster payments on invoices from Amazon and other e-commerce sites. Instead of waiting to get paid for filled purchase orders, Payability’s customers get cash up front for their invoices. This means Vendors can replenish their inventory with no waits.
“When a vendor’s products are sold on Amazon they typically have to wait 30 to 60 days to get paid. Because of this wait period, some businesses might not have the cash on hand or credit to replenish their inventory. Payability’s financing platform accelerates those payments so vendors have the capital they need to grow faster,” Keith Smith, CEO of Payability said.
Of course Amazon vendors must go through an approval process – but once they become a client they can access these payments faster than they would via Amazon. Instead of waiting that 30 to 60 day window – Payability will distribute payments weekly.
Payability is also expanding their accelerated payments to include more e-commerce marketplaces and also introducing a new product: Payability Instant Access, which gives startups next-day access to their Amazon sales.
“Whether you need capital to finance purchase orders, pay employees or invest in marketing, waiting months for Amazon to pay your accepted invoices can cause sleepless nights, and even force you to slow the growth of your business. Payability turns your sales into cash by paying you each week for accepted invoices – like clockwork – giving you the capital you need to keep up with growing demand,” Smith said.
Amazon Vendor Financing & Launchpad
Recently, Payability announced that they’ve teamed up with Amazon Launchpad to provide financing for the Amazon Launchpad startups.
Last year, Amazon announced a new program designated for successful startups, Amazon Launchpad. The objective of the program is to make it easier for startups to launch, market and distribute their products to millions of customers across the Amazon Marketplace.
Since launching a year ago, Amazon Launchpad has worked with over 100 leading venture capital firms, startup accelerators, and crowd-funding platforms to help more than 1,000 startups launch products in the U.S., U.K., China, Germany, and France.
Launchpad offers custom product pages, a marketing package, and access to Amazon’s global fulfillment network, all geared toward helping startups successfully launch their innovations.
One year later, Amazon followed up with an official partnership with one of the most prominent crowdfunding platforms to date, Kickstarter.
According to the announcement, the Amazon “Kickstarter Collection” aims to sell more than 300 crowdfunded products via Amazon Launchpad.
Although we don’t know if the portal itself will help to increase visibility to the products within it, since those products will surface for a regular search on Amazon.com, the Launchpad for Kickstarter ecosystem could become a powerful marketing tool for Amazon to use to convince other new and innovative products to get on board.
Payability is now featured as a financing solution on the newly released Amazon Launchpad Services Hub. Payability’s relationship with Amazon Launchpad provides vendors with automated capital-as-a-service financing platform.
According to Amazon, the Launchpad Services Hub brings together companies that can provide product development, marketing, and financing services to startups.
As a program designed to help startups launch, market, and distribute their products, Amazon Launchpad has now built this new resource for startups to use before they are ready to officially launch their product – from prototyping to manufacturing to marketing to accounting.
What vendors should know about Payability’s partnership with Amazon Launchpad:
- Payability pays the vendor as soon as Amazon receives product. This is about 2 months before a vendor would normally receive payment.
- Payability’s automated system works directly with Amazon to do the invoice tracking and calculations, allowing vendors to receive their earnings each week.
- There is no repayment. Payability will advance funding on the vendor’s accepted invoices, Amazon then pays them directly on their standard payment terms.
- Payability’s funding scales as the vendor’s sales grow so vendors don’t have to slow their growth due to financing constraints.
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