Have you looked at your invoices and noticed a deductions from Amazon that says: PROVISION FOR RECEIVABLE.
Provisions/Risk = Receivables – Payables from Amazon perspective.
Over the next 12-24 months Amazon is going to be pushing Vendors that are not performing at a certain sales or growth number into Seller Central. Let me repeat this again – yes Vendors are going to be pushed into Seller Central.
Look at some of the facts:
- Provision for Receivable – this is protect their position and ensure they receive their money because you all of sudden make a switch from Vendor Central to Seller Central – Amazon is out money that you owe them.
- AMS or now Amazon Marketing has all of the same marketing features for both Vendor and Seller accounts.
- Seller Central now has all of the self-service features that Vendor Central has.
Provisions for receivables are temporary credit memos that Amazon can place on your account when the forecasted costs associated with returns, marketing and rebates that are due to Amazon exceed the forecasted payments owed to you.
Returns : The returns which have not been billed to you and Marketing & Rebates are the coop invoices in reference to the agreements which have not been billed to you.
Please note that provisions are recalculated, adopted or reversed on a daily basis. As they are not “real” deductions, there are no invoice copies. Therefore, the provisions will not be available in your vendor central account.
Provisions are deducted from payments due to you, and are subject to a subsequent adjustment based on the actual costs of returns, marketing and rebates and the actual payments due to you.
The purpose of these provisions is to prevent returns, marketing and rebates creating a debit balance on your account.
On the other side of the coin, the holdback prevents from a large return or enter the actuals for an agreement to bill all at once, which could then end up with the vendor in debit balance. The longer that a vendor is in debit balance, the longer that you being paid in timely manner.
What does a Provision for Receivables look like?
Each provision placed will be displayed with the date it was placed and look like this: YYMMDD_PROVISION_FOR_RECEIVABLES. For example, a date of 181201 on your remittance means that the provision was placed on December 1, 2018. It will look like this: “181201_PROVISION_FOR_RECEIVABLES”
The temporary provision for receivables will reverse when invoices for returns, marketing and rebates are settled or a decision is made not to return the inventory. When a provision is reversed, it will show as “181201_PROVISION_FOR_RECEIVABLES-R” (notice the -R at the end).
This is a tool driven process and it does not generate any paperwork or invoice, both in the implementation stage or the reversal.
We will reverse the current provision once the risk is mitigated and the same will be refunded to your account.
If you are doing business with Amazon and still don’t understand this – feel free to reach out to ADEN Branding for help.
ADEN Branding is a full service Amazon Account Management Agency that specializes in both Vendor and Seller Accounts.