There are two types of Amazon factoring services available. The first is Amazon vendor factoring, which is available to independent merchants and retailers who sell through Amazon’s e-commerce platform. The second type is for freight and transportation service providers. This applies both to long haul truckers and freight haulers as well as third party last mile delivery service suppliers.
Keep reading to find out how these two Amazon factoring services speed up organizational cash flow for faster business growth.
How factoring works for Amazon sellers
Amazon was one of the first online marketplaces to fully develop the concept of a hybrid retail model. They did this in early days through partnership with shoe retail giant Zappos along with their online bookstore. Coupled with a member option that provided free shipping, Amazon turned what they learned from this business model into a scalable operation where consumers and business buyers alike can find nearly any physical product they are looking to buy.
As part of this growth, Amazon has made it possible for small and large supply chain manufacturers, suppliers, and distributors to bring physical products to sell online quickly and at a fraction of the cost of building and marketing their own e-commerce websites. And here’s where Amazon factoring services come into play. Ecommerce vendors and manufacturers selling on Amazon don’t get immediate access to earnings when sales are made. Instead, they wait anywhere from 30-60 days to receive payment.
This arrangement is understandable, especially in cases where Amazon would be on the hook for refunds, as they can easily deduct chargebacks from a merchant’s earnings before sending the merchant their earnings for a given time period.
While it works well for Amazon, it doesn’t work as well for the Amazon seller. It delays incoming cash flow to their operation for weeks. The negative effects of slow cash flow then translate into opportunity costs, such as the inability to take on new business or fulfill larger orders, limited ability to replenish inventory needed for resale or production, and so on.
Invoice factoring solves this problem for Amazon sellers. The process works like this:
- Amazon seller receives a month-end earning statement or sales report and factors it with a receivables financing company
- On the same day, the Amazon seller receives anywhere from 90-98% of the total of the earnings statement
- The factoring company earns a fee (generally from 2-8%) which is realized when Amazon remits payment for the earnings statement 30-45 or even 60 days later
- Any amount held in reserve (aka “holdback”) is returned to the Amazon seller at this time as well
How Amazon factoring services benefit sellers using the platform
Speeding up cash flow by factoring Amazon earnings statements or sales reports offers several benefits to sellers and retailers using the platform. For example, you can use expedited cash flow to pay your own suppliers faster, which often provides cost savings that offset or even exceed the factoring fee. Second, you can reinvest in your operation faster. This is key for growing a business as it enables Amazon merchants to maintain or increase production, fill bigger orders, sell on multiple e-commerce platforms, and more.
How factoring works for Amazon trucking and last mile delivery vendors
The process for freight, trucking, and delivery services is similar to that of Amazon vendors. Complete an order by delivering goods or services and generate an Amazon invoice. Or, in the case of contract delivery services, this could be an earnings statement or retainer – anything that shows you’ve completed services and earned money payable to your business from Amazon.
The same day, factor the invoice or earnings statement with a receivables financing company. We work with some of the best freight factoring companies in the business, including factoring programs with competitive rates, yes, but also keeping you in control with no requirement for long-term contracts or factoring minimums. These companies want you to be able to do what’s best for your company, and they want to provide business financing services that help you grow your business over the long term.
- Generate an invoice or earnings statement, and factor it
- The same day, get up to 98% of the amount of the invoice or earnings statement
- The accounts receivable factoring company earns a fee (usually ranges from 2-8%), which they receive when Amazon remits payment, and any amount heldback in reserve is also returned to you at that time
How Amazon factoring services benefit freight haulers and last mile delivery services
Factoring has been a business financing staple in the trucking industry for decades. In fact, freight factoring is essential for growing a trucking, transportation, or logistics business. This is because fast cash flow is a must for taking on the next freight hauling order, keeping trucks on the road with fuel and any repairs that come up, and adding drivers and trucks to take on bigger customers or serve more customers at the same time.
The same is true for local delivery companies and contract-based last mile delivery service vendors. Faster cash flow keeps your operation going and gives you the ability to grow more quickly. Learn more about receivables financing and what sets the best freight factoring companies apart.
Want to get a better idea of how the process works? Use our invoice factoring calculator by entering the amount of average monthly earnings or an average invoice or sales report. The calculator shows you the amount of advance you could receive the same day you factor an invoice or e-commerce vendor earnings statement.
Get a free quote for Amazon factoring services
We have top accounts receivable financing companies waiting to help you grow your business. They are happy to provide you with a 100% free, no-obligation quote for factoring services, even if you’re already factoring invoices with another company.
You can compare it to your current agreement, or, if you haven’t factored invoices before, you can find out exactly how it can benefit your business, whether it’s worth it, and how much money you could unlock immediately by factoring Amazon invoices and earnings statements, instead of waiting several weeks to receive the money you’ve earned.