#Amazon vendors risk their cash flow because they ignore Provision for Receivables (PFRs). 🚫💸

So if you've never heard of them or are unsure what they're about, here's everything you need to know:

What are PFRs?

PFRs are temporary credits Amazon charges to your account because they believe the charges from orders placed on your account exceed the payments they owe you.

In other words, Amazon will only pay your invoices if they owe you more money than you owe them.

Now, PFRs are **temporary** credit notes.

Once more orders get placed, Amazon will debit your account.

But here's the thing:

Shortages and chargebacks flow into the calculation of Provision for Receivables.

So if you don't dispute and resolve them regularly, your free cash flow gets killed. Leading to financial distress if you're not planning for it.

So how can you reduce the negative impact of PFRs?

By following a few simple rules:

🚧 Reduce shortages via catalogue updates
🧯 Address root causes of chargebacks
🤺 Dispute erroneous charges regularly
💲 Educate your finance team on PFRs
🚦 Prioritise front-margin investments
🔻 Limit the % of your trade terms

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What's your best tip to navigate PFRs?

Share it in the comments!