๐ธ Unpaid invoices (shortages) keep hashtag#Amazon vendors up at night.
I've seen cases where outstanding shortages account for over 20% of total sales with Amazon.
Contrary to popular belief, this isn't an intentional revenue stream for Amazon.
Instead, it's a byproduct of rapid development by decentralised tech teams that havenโt aligned catalogue attributes with existing inbound and warehouse processes.
1P suppliers know that disputing these shortages is anything but pleasant:
โ Amazon often automatically rejects raised disputes.
โ Vendor Managers rarely have the resources to validate payment requests.
The result?
Unpaid invoices pile up until vendors hit a breaking point - either they settle the outstanding amount with Amazon, or they halt PO shipments.
But it doesn't have to get this far.
Let's understand how your teams can effectively manage shortages with Amazon:
๐ญ- ๐ฆ๐ฒ๐ ๐๐ฝ ๐๐ต๐ฒ ๐ณ๐ผ๐๐ป๐ฑ๐ฎ๐๐ถ๐ผ๐ป
Start by ensuring you keep on top of shortages. Set up internal tools and processes to review the amount of unpaid invoices. Work with your finance business partner to dispute unpaid invoices weekly via Vendor Central.
๐ฎ- ๐๐ฒ๐ณ๐ถ๐ป๐ฒ ๐๐ฟ๐ถ๐ด๐ด๐ฒ๐ฟ ๐ฝ๐ผ๐ถ๐ป๐๐
Next, define revenue thresholds for $ shortages based on your Net Receipts. Set trigger points for escalations with Amazon. For example at 5% or 10%.
๐ฏ- ๐๐ฟ๐ฒ๐ฎ๐๐ฒ ๐ฒ๐๐ฐ๐ฎ๐น๐ฎ๐๐ถ๐ผ๐ป ๐บ๐ฒ๐ฐ๐ต๐ฎ๐ป๐ถ๐๐บ๐
When disputes escalate, provide your Vendor Manager and AVS Brand Specialist with a detailed overview of the PO, invoice, shortage volume, and unpaid invoice amount. Request a resolution within 14 days.
If you highlight that otherwise the business trade is at risk, they will likely expedite the resolution.
Note: this only works when you have followed the steps before. Taking shortcuts won't work.
๐๐ผ๐ป๐๐:
Keeping on top of these processes takes time, effort and (expensive) resources. You don't want a full headcount resource raising disputes all day long.
Instead, outsource the dispute resolution process or work with a service provider that performs or automates this process for you.
---
How are you dealing with Amazon shortages?
Let me know your best tip in the comments!
