Account level reserves can be a weighty setback for rapidly-growing Amazon brands. From securing inventory to investing in ad campaigns to keeping your vendor relationships in good standing, having quick access to cash is a must.
In fact, we’d even go as far as saying that keeping cash flow moving is pivotal to your success as an Amazon seller. But what happens when the honey pot’s on hold? How can you keep your business running when Amazon won’t release funds until well after your customer receives their product?
Let’s take a closer look at what sellers really need to know about account-level reserves — and more importantly — how to get access to funds if you ever find yourself in a stalemate due to an account-level reserve.
The Scoop on Account Level Reserve
- What is the Amazon account level reserve? And what does it mean for Amazon sellers?
- An overview of Amazon’s seller payment terms and cycle
- Why does Amazon put reserves on sellers’ accounts?
- Breakdown of Amazon’s reserve tiers
- How long does it take before a reserve becomes available for payout?
- How to view your current Amazon reserve amount
- What to do when you have an account level reserve
- Tips to avoid an account level reserve
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What is the Amazon account level reserve? And what does it mean for sellers?
The Amazon seller account level reserve is a sum of money Amazon reserves from your balance to cover potential chargebacks, returns, refunds, or guarantee claims after customers receive your product. It’s also called an “unavailable balance”.
You can think of it as insurance of sorts — a proactive strategy meant to protect you, Amazon, and the customer. By holding onto a part of the money in your seller’s account, Amazon guarantees all parties will be taken care of in the event that you can’t fulfill an order.
In other words, it’s Amazon’s way of helping you carry out your obligations as a seller.
So, not all bad.
By using the reserve as a buffer, customers have enough time to issue a complaint or return an item.
But there’s a caveat here. With an account-level reserve, you may have to wait 14 days or more to get your Amazon payout. Additionally, your payout could roll over into the next cycle or even stay on hold for several payouts. 😬
Let’s dig into some of the reasons why this happens and when you can expect your payout if you have an Amazon account level reserve.
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Why does Amazon put reserves on sellers’ accounts?
Interestingly enough, Amazon also reserves a part of your balance to prevent fraud.
When Amazon didn’t have holding periods, scammers took advantage of the system by selling tons of inventory for cheap with extended shipping times. This gave scammers the perfect opportunity to collect their profits and vanish before Amazon noticed.
As you can imagine, Amazon had to bear the expense and reassure irate customers that their refunds were on the way.
Some other reasons why Amazon might put a reserve on your seller account include:
- You didn’t provide shipping confirmation
- You have open A-to-z guarantee claims
- Your seller performance has fallen below Amazon’s benchmarks
- Local tax regulations require Amazon to withhold income tax from you (this varies by store)
- You have chargebacks on one or more of your orders
- Your seller account is under review
- You have payment information errors
Breaking Down Amazon’s Reserve Tiers
Using a tiered model, Amazon looks at various factors including your Order Defect Rate (ODR), how old your account is, and how many orders you’ve fulfilled. This helps Amazon determine how much money it needs to reserve from your account.
To discover how much money Amazon will keep, start by figuring out which tier you fall under based on the latest guidelines for 2022.
If you’re a new Amazon Pay merchant, you’ll automatically fall under Amazon’s first tier, which means:
- 100% of your payments processed over the past week will be held in reserve for seven days after the transaction processing date
- Amazon will hold the amount of all unresolved transaction disputes, such as guarantee claims and chargebacks
After a year of using Amazon Pay and having a minimum of 100 completed orders, you’ll get upgraded to Amazon’s second tier.
Your account may also be eligible for an upgrade to Tier II if:
- You’ve been an Amazon Pay merchant for at least six months
- You have a minimum of 100 completed orders
- You’ve maintained an ODR below 1%
Amazon’s second tier amount is 3% of your daily processed payments averaged over the past 28 days — or the total value of unresolved transaction disputes — whichever is greater.
And then there’s Tier II-Plus — fancy, right?
Once you’re in Amazon’s second tier and you’ve maintained an ODR below 1% averaged over the past 60 days, you’ll get upgraded to Tier II-Plus.
Once you’re in Tier II-Plus, Amazon will only hold the number of unresolved transaction disputes. Ahhh, good news!
But, there’s a warning here. ⛔
If at any time your ODR reaches the 1% threshold, you’ll automatically revert to the second tier until you meet the criteria for Reserve Tier II-Plus again. Unfortunately, Amazon won’t notify you about this, so you’ll need to keep an eye on your ODR information in Seller Central.
Amazon account level reserve: How long before a reserve becomes available for payout?
If you head to Reddit or Quora, you’ll see countless sellers asking others when they can expect to receive their payouts.
Here’s an example you might be all too familiar with…
Spoiler Diecast says:
“I’ve been selling on Amazon for almost six months and have had success so far — and my account is in good health. I’ve had hardly any returns or cancellations and I always ship on time. However, it’s taking forever to get paid. My total balance is $3,517 but my available funds are only $275. It’s been like this for days. Is this discrepancy normal? It’s really frustrating to have my money just sitting there limiting me from buying more inventory.”
Yikes. Now just imagine multiplying those numbers by 10. Spoiler’s experience is enough to make any seller cringe.
Because here’s the deal. The spoiler might be waiting a while longer before Amazon will release the funds.
The actual reserve amount depends entirely on the tier they fall under. But as far as when Amazon will release the money? That’s typically seven days after the order’s delivery date, or an approximate 14-day turnaround from start to finish.
Here’s an example timeline:
- The customer places an order on January 1st
- You ship the order on January 2nd
- The customer receives the order on January 7th
- The funds from the sale are released to your account on January 14th
However, with new sellers, Amazon needs to build up the amount in the account level reserve — meaning payouts may be delayed four to six weeks after the first sale. New sellers should keep their expectations low when waiting to receive their first payout.
How to view your current Amazon reserve amount
Viewing your current Amazon reserve amount and reserve percentage is simple. You can view it in the Chart of Accounts on the payment dashboard. Just head to “Reports”, then “Payments”, and then “Chart”.
You can also see reserved funds in the account level reserve section on the Statement View tab on your Payments report.
What to do when you have an account level reserve
If you have an account-level reserve and you need access to cash flow, there are several strategies you can use.
Here are some of our top tips:
- Lock arms with a flexible funding partner — aka yours truly 🥰
- Apply for a line of credit that only charges interest on the amount you borrow
- Arrange longer payment plans with your suppliers
- Respond to any A-to-z guarantee claims and chargebacks to speed things up
- Build up your emergency savings account
- Get a bank or online business loan
- Keep your account in good standing
- Diversify with other sales channels and e-commerce platforms, such as Marketplace, Shopify, BigCommerce, Walmart, Etsy, and eBay to bring in more cash
- Apply for a business credit card that offers zero interest payments for up to a year — switch to a new zero interest card when the year’s up
- Get a loan from a trusted friend or family member (keep it professional by setting up a contract)
Obviously, not all of these strategies are right for all sellers. Be sure to consider your niche, business model, growth goals, and resources before finalizing your cash flow methods.
Tips to avoid an account level reserve
Obviously, you’ll want to know how to avoid an account-level reserve in the first place, right?
While it’s not always possible, there are still a few measures you can take to try to avoid an account-level reserve.
- Keep a close eye on your account health and make sure your seller performance meets Amazon’s expectations
- Be quick to resolve customer disputes and implement their feedback
- Follow Amazon’s fulfillment guidelines to a tee
- Only sell high-quality products to customers
- Offer high-level customer support options
- Deliver a pristine customer experience from product inquiry to purchase to shipping
- Perfect your shipping process to prevent slow deliveries and shipping mistakes
- Maintain an ODR below 1%
- Play the long-term game — commit to selling on Amazon for at least six months
Moving forward: Preserving cash flow amidst an Amazon account level reserve
In the end, the Amazon account level reserve can feel like a major setback. But when you’re armed with the knowledge of how it works, how to prevent it, and what to do if it happens, you can thrive as a seller no matter what.
And if you need help keeping your cash flowing despite an Amazon account level reserve, we’ve got you covered.
Designed to tackle cash flow issues that come from snail-like marketplace payouts, the Daily Advance solution could be the solution you’ve been looking for.
In fact, our Daily Advance solution cuts your wait time for Amazon payouts from two weeks to 24 hours.
With a Daily Advance, you can receive up to 90% of your previous day’s sales with rates as low as 0.5% of the advanced amount. That includes a zero prepayment penalty and no impact on your personal credit score. Learn more about how we can help.
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