What Happens When Amazon Places a Hold on Your Funds? And What Is an Amazon Reserve?

If you’re selling on Amazon, it’s quite common to encounter a situation where your funds are held by Amazon. Whether you’re a new seller or a seasoned one, this can be a confusing and frustrating experience. Sellers often wonder why Amazon holds their funds and for how long, especially when they are relying on cash flow to keep their business running smoothly.

Let’s dive into the basics of Amazon fund withholding, reserves, and how you can navigate this process to ensure your business stays on track.

What Is an Amazon Reserve?

An Amazon reserve is essentially a hold placed on a portion of a seller’s funds for any number of reasons. It’s important to note that these reserves can vary depending on the circumstances, and sellers need to understand the different types of holds Amazon may impose. Here’s a breakdown of the most common reserves:

1. Delivery Date-Based Reserve

This reserve, also known as a Deferred Transaction, occurs when Amazon withholds funds until a Merchant Fulfilled Network (MFN) order is delivered and verified. Amazon holds onto this money to cover any potential claims, returns, chargebacks, or refund requests.

The standard rule Amazon follows is called the “DD+7” policy, where funds are held for 7 days after the Expected Delivery Date (EDD) or actual delivery date. So, you can expect your funds to be released no earlier than 8 days after Amazon confirms or expects the delivery.

Amazon rolled out this policy globally in 2016, but some marketplaces implemented it at different times, and some regions, like Europe, may still offer sellers an extension on transitioning to this policy until 2025.

2. Account-Level Reserve

An Account-Level Reserve is another type of hold on funds that have already been cleared for disbursement but are temporarily frozen due to specific triggers. These triggers could include:

  • Ongoing A-to-Z claims: These claims, which protect buyers, can take weeks to resolve.
  • Unresolved chargebacks: This includes any chargebacks from the last 90 days.
  • Poor performance metrics: Failing to meet Amazon’s benchmarks can lead to a temporary hold.
  • Account review: If Amazon detects unusual activity, sales fluctuations, or if a seller is new and has long delivery estimates, a review may be triggered.
  • Owing taxes: Depending on local regulations and your tax registration status, Amazon may withhold funds to cover taxes owed.

Unlike delivery date-based reserves, the Account-Level Reserve doesn’t follow a strict timeline. Funds are held until Amazon determines that there is no longer a risk or issue with the account. Sellers who generate substantial sales may experience account-level holds consistently.

3. Pending Transactions

Another common hold occurs with Pending Transactions. This usually involves orders placed through Amazon Business. When an Amazon Business buyer orders from a seller, payment may be delayed as the buyer may have up to 45 days to settle the payment. The funds will not be released until the payment is received.

If the buyer delays payment beyond 45 days, Amazon credits the seller on the 7th day after the payment due date. Sellers can also opt for early payment on these orders for a processing fee of 1.5%, which can help improve cash flow.

4. Withheld Funds

Withheld Funds occur when Amazon suspects fraudulent, illegal, or deceptive activity on a seller’s account. If your account is flagged, Amazon may hold your funds to cover any potential claims, refunds, or chargebacks within 90 days of a suspension.

If the activity is deemed fraudulent, Amazon can permanently hold the funds. Fraudulent activity may include:

  • Falsifying information.
  • Submitting forged documents.
  • Misrepresentation of products.
  • Violating Amazon’s anti-counterfeit policy.

If your account is deactivated, funds become inaccessible. However, if you successfully appeal the deactivation, the funds may be released after a 90-day waiting period.

5. Cleared Payment Delays

Even when funds are cleared for disbursement, there can still be delays in processing. Once Amazon clears a disbursement, it can take up to 5 additional days for the funds to appear in your bank account. This is a normal part of Amazon’s disbursement process, but it can be frustrating for sellers relying on steady cash flow.

How Long Does It Take to Get Paid?

The time it takes to receive funds from Amazon depends on several factors, including the delivery date, tracking, and disbursement settings. Here’s a typical timeline:

  • For a U.S. seller with domestic orders, the funds may be available in 15-20 days after a sale. This includes 2 days of standard lead time, 7 days for delivery, 7 days for the DD+7 reserve, and a couple of days for the funds to be disbursed.
  • For international orders, especially those without tracking numbers, it may take up to 50 days. International shipping can take up to 28 days, with the DD+7 reserve and up to 14 days for disbursement processing.

Managing Cash Flow with Amazon Reserves

Dealing with Amazon reserves can be challenging, but there are a few ways to mitigate the impact on your cash flow:

  • Request Daily Disbursements: If you are a new seller, you can request daily disbursements to receive your funds more frequently.
  • Monitor the Payments Dashboard: Amazon provides a dashboard to view deferred transactions, account-level reserves, and pending payments. Stay on top of this to understand when your funds will be available.
  • Improve Performance Metrics: Ensure you meet Amazon’s performance benchmarks to avoid unnecessary account-level reserves.

For sellers with older, “grandfathered” accounts, disbursements happen automatically every two weeks, and these accounts generally don’t experience reserves.

Why Do These Holds Matter?

Selling on your own website means instant access to your revenue. However, when you sell on Amazon, your funds can be held for up to several weeks. This delay can create challenges for managing cash flow, especially during busy sales periods like Q4 or Prime Day.

Understanding how Amazon reserves work and taking proactive steps to minimize their impact is crucial for maintaining a healthy business. By staying informed, monitoring your account, and optimizing disbursement options, you can better manage your cash flow and avoid unpleasant surprises.

Conclusion

Amazon’s fund withholding policies, reserves, and disbursement processes may seem complex, but they are part of the platform’s effort to protect both buyers and sellers. By understanding the different types of holds and reserves, you can navigate these challenges and ensure your business stays afloat. Make sure to monitor your performance, stay on top of your payments dashboard, and consider daily disbursements to keep your cash flow in check.

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