If you’re an Amazon seller, then you may have heard of the term “account level reserve.” But what is account level reserve Amazon, and what does it mean for your business?
In this article, I will explain everything you need to know about account level reserve Amazon. I’ll cover what it is, how it works, and why it’s important for sellers to understand it.
By the end of this post, you’ll have a clear understanding of how this feature can impact your business!
Account level reserve is a fund that Amazon holds in order to cover potential refunds or chargebacks that may be issued to your account.
It is also referred to as Unavailable Balance.
When a seller has an account level reserve, Amazon will hold a certain amount of money from that seller’s account balance in order to make sure that the seller can still pay Amazon if they are unable to fulfill their orders.
This reserve is based on a percentage of your total sales, and it is held as a precautionary measure in case you are unable to fulfill a refund or chargeback.
This percentage is also based on your account history, and it is typically around two percent.
For example, let’s say you have an account level reserve of two percent. If you make a sale for $100, Amazon will hold $2 in reserve in case a refund or chargeback is issued for that sale.
An account level reserve is important because it protects Amazon from financial loss in the event that a seller is unable to fulfill a refund or chargeback.
This reserve also provides sellers with peace of mind, knowing that their account is protected against potential issues.
Account level reserve is a necessary part of doing business on Amazon, and it’s important for sellers to understand how it works.
By knowing how this feature works, you can protect your account and avoid any potential problems down the road.
There are three different tiers that a seller can be placed in, and each tier has a different percentage that is held in reserve:
New Amazon Pay merchants belong to this group. However, the reserve amount is equal to the total of all payments processed through a seller’s account during the previous seven days. Additionally, the value of the outstanding transaction disputes is included in the reserve amount.
Sellers in Tier Two are those who have processed at least 100 orders and have been Amazon Pay merchants for a year. For the purpose of calculating the reserve amount, the higher of either 3% of the daily processed payments (an average of over the previous 28 days) or the total amount of all unresolved transaction disputes shall be included.
The value of all unresolved transaction disputes serves as the reserve amount for this category. Additionally, sellers who have kept their ODR at less than 1% on average over the previous 60 days are included in this group.
There are a few reasons why Amazon places a reserve on your account.
The most common reason is if you have a high volume of sales, or if you’ve had a lot of chargebacks or refunds in the past.
This is because Amazon wants to make sure that you have the funds available to cover any potential refunds or chargebacks.
Another reason why Amazon may place a reserve on your account is if you’re new to Amazon Pay.
Since you’re new, Amazon doesn’t have a history with you yet, so they may place a reserve on your account as a precautionary measure.
If you have a lot of outstanding transaction disputes, this can also trigger a reserve on your account. Amazon wants to make sure that they’re protected in case any of those disputes are not resolved in your favor.
Amazon’s A-to-Z guarantee claim process also plays a role in account level reserves. Sellers who have a lot of A-to-Z guarantee claims filed against them are more likely to have a reserve placed on their account.
Amazon just wants to make sure that they’re protected in case the seller is unable to fulfill the refund or replacement item.
Lastly, Amazon may place a reserve on your account if you have had a high number of customer complaints. This is because Amazon wants to make sure that there is enough money for refunds if they feel like you’re not meeting their standards.
It is however important to note that having an account level reserve is normal and should not be a cause for alarm.
In most cases, the reserve is placed as a precautionary measure and it doesn’t mean that your account is at risk.
The amount in your reserve account depends on the timing of your sales’ deliveries, the volume of those sales, and the consistency of your payments. Your sales revenue will be kept in the reserve account up until the reserve period, which is seven days following order delivery.
The funds are then disbursed to the Amazon FBA seller. Your sales revenue will likely be held for about two weeks following the sale.
For example, if a customer buys an item from you on December 20th, the sale will be processed on December 21st and shipped. It will be delivered on 26th and the revenue from that sale will be available to you 7 days after delivery, on January 2nd.
Your account level metrics, including seller standing, the volume of sales without issues, the duration of time as a seller, as well as seller feedback, have an effect on the amount held in your Amazon account level reserve.
Because of this, new Amazon sellers will hold back more reserves than veteran sellers. Payouts frequently take 4-6 weeks to arrive after the initial sale.
Amazon will have to allow sales amounts to accumulate to form your account level reserve. Therefore, it’s crucial for new sellers to have realistic expectations regarding when they will receive their first payment.
An Amazon FBM seller is a seller who uses Amazon’s Fulfillment By Merchant program. This means that the seller is responsible for shipping the products to the customer, rather than Amazon.
The main difference between an FBM seller and an FBA seller is that an FBM seller does not have their inventory stored in Amazon’s fulfillment centers. Because of this, Amazon does not have as much control over the FBM seller’s inventory, and thus they are considered to be a higher risk.
Because of this, Amazon FBM sellers often have a higher reserve than FBA sellers. The amount that is held in reserve depends on the sales volume, as well as the number of customer complaints.
In the case of FBM sellers, funds are held in the account level reserve based on the estimated delivery date, and not the actual delivery date. This means that based on tracking, Amazon will hold the funds for 7 days after the estimated delivery date, even if the products arrive earlier.
The Chart of Accounts on the payments dashboard shows the current reserve amount for every seller. This amount will fluctuate in line with your payment history and sales volume.
Additionally, you can view your reserve percentage, which represents the portion of your Amazon Seller FBA sales revenue that Amazon will keep in reserve. To access it, go to Reports > Payments > Charts.
- Net Proceeds: This represents the anticipated payout for the payment cycle.
- Beginning Balance: The amount of reserves from the previous payment cycle
- Sales: How much money did you bring in during that time?
- Refunds: Amazon’s reimbursements
- Expenses: These costs include your monthly professional account selling fee, commissions from sales, and shipping costs.
- Account Level Reserve: The amount of reserves held in a given period.
Your Account Level Reserve will carry over to the first balance of the subsequent period, regardless of the time period in which it was created.
Amazon typically pays you every two weeks. Every payment includes 14 days’ worth of your orders that were delivered at least seven days prior (minus Amazon’s fees).
The date you registered as a seller will determine the precise dates of each payout. This indicates that, unlike some marketplaces, Amazon may not always start processing payments on the first and fifteenth of each month.
Since they value customer satisfaction, Amazon pays out proceeds seven days after the most recent estimated delivery date. Holding back your payouts gives your customers time to review their orders for any problems.
Within that 7-day time frame, if a customer is unsatisfied and requests a return, Amazon will process the request using the funds it has set aside.
Once the 7-day Amazon account level reserve holding period has ended, all sales are now eligible for payout. The next payout date will be 14 days from your early payout if you opt to be paid early. This resets the payment date.
It will still take an extra 2–5 days for your funds to be transferred to your bank account if you choose to be paid automatically through the Amazon Settlement payout. Here is an example timeline for the payout schedule from Amazon:
It’s typical to have to wait longer than 14 days to get paid.
Here are a few causes for this:
- The remaining balance will roll over into the following payment period if orders are delivered in under 7 days from the date of your payout.
- It may take 3-5 business days for actual money transfers to appear in your account. Thus, Amazon pays you every 14 days as is customary.
- As an “account level reserve,” Amazon may keep all or a portion of your payment for longer than 14 days.
Here are a few tips to avoid having an Amazon seller account level reserve:
- Sell high-quality products that will result in fewer customer complaints.
- Fulfill orders promptly and accurately to avoid negative feedback and to keep your customer satisfaction rating high.
- Maintain a good history of on-time payments.
- Monitor your sales volume and adjust your prices accordingly. Allow your sales volume to grow steadily over time.
- Keep your shipping costs low.
- Respond quickly to any customer inquiries or complaints.
If you already have an account level reserve, don’t panic. You can take steps to improve your situation and avoid having the reserve in place for long.
Here are a few things you can do
If you have a good history of selling on Amazon, you can ask your credit card company for an increased credit limit.
This will give you more room to make sales without worrying about going over your limit and incurring fees.
If you have a good relationship with your bank, you may be able to get a term loan.
This can provide you with the funds you need to cover your account level reserve and keep your business running smoothly.
It is, however, important to note that you will need to have a good credit score to qualify for a loan.
There are many alternative financing options available for small businesses. Some of these options include online business loans.
These can be a good option if you don’t qualify for a bank loan. The application process is usually quick and easy, and you can get funds deposited into your account in as little as 24 hours.
If you have savings, you can use them to cover your account level reserve.
This is usually not the best option as it can put a strain on your finances, but it may be necessary if you don’t have any other options.
When your money is held up in an account level reserve, it can be difficult to meet your financial obligations.
One way to ease the strain on your finances is to ask your suppliers for longer payment terms.
This will give you more time to pay them back and avoid defaulting on your payments.
If you’re looking for a way to get access to your funds sooner, Payability can help.
With their Instant Access program, you can get paid daily on your Amazon sales, even if you have an account level reserve.
They’ll advance you up to $200 per day so you can keep your business running smoothly.
Yes, Amazon can legally hold your money. They are a business and they have the right to protect their interests.
When you sell on Amazon, you are agreeing to their terms and conditions. This includes giving them the right to hold your payments for up to 14 days.
As we have seen, they hold part of your revenues in the form of an “account level reserve.” This is to protect themselves against chargebacks, refunds, and other risks associated with selling online.
Account level reserve is a temporary hold on your funds. The funds are held for 14 days to protect Amazon against chargebacks, refunds, and other risks associated with selling online.
After the 14 days have passed, the funds will be released and you will receive your payment. If there is an issue with a product delivered, the Amazon reserve balance may be held for longer as Amazon investigates the issue.
If your Amazon account level reserve is negative, it means that you have a balance due to Amazon.
This can happen if you have outstanding fees or charges, such as refunds or chargebacks, and the amount of money in your account level reserve is not enough to offset this balance. You will need to pay this balance before you can withdraw any funds from your account.
An account level reserve Amazon is a safety net for the company, to ensure that they don’t lose money if you issue refunds or have chargebacks on your account.
It’s important to be aware of this fund and how it may impact your business.
As you can see, there are several things that can cause your account level reserve to be negative.
If this happens, you will need to pay the balance before you can withdraw any funds from your account.
You can do this by increasing your credit limit, getting a bank loan, or tapping into your savings. Alternatively, you can sign up for Payability’s Instant Access program.
This will give you the funds you need to keep your business running smoothly.
Do you have any questions about account level reserve? Leave a comment below and let me know. I’ll be happy to help!