If you’re serious about the expansion of your business, you’ll need to start automating your payments as soon as you can. That way, payments take care of themselves, leaving you more time to focus on what really matters: the growth of your store.
STEP 1: Choose your pricing model
First things first, you’ll need to decide on the pricing model you’d prefer to use. There are two options here.
Option 1: The cost-price-based model
The first option revolves around the cost prices of your vendors’ products. To automate your payments using this model, you’ll need to sync cost prices with each of your vendors. This can be done using Jetti - you’ll be able to connect to your vendors’ CSV feeds and set up a batch import/export to gather the data. Alternatively, cost prices can be manually set individually - but of course that can prove time-consuming.
Option 2: The commission-based model
This is a much simpler way to do things, which is why our team recommends it. With a commission-based pricing model, you simply set a percentage commission rate for your vendors. You’ll need to think about whether or not to absorb any discounts in your sales, for example if you are running a promotion on your store. You’ll also need to consider whether extend any promotions on your vendors store to your customers.
Transaction or Handling Fees
Bear in mind your handling fees and any other fees your multi-vendor marketplace might incur when you’re thinking about whether or not to opt for a commission-based or cost-based payment model. For example, do your vendors charge handling fees per item or per order? Are there any transaction fees involved which you need to account for? With Jetti’s landed costs feature, all of this can be integrated into your payment model, so there’ll be no nasty surprises when you start looking at your profit margins!
STEP 2: Select your payment method
The type of payment methods your store offers are likely to be dictated by the vendors you’re working with. If you’re working with larger vendors and wholesalers, you might find that payment terms are dictated to you. They might hold a credit card on file, or request payment prior to shipping. You may be able to negotiate out of these terms, but if not, you’ll likely put it down as one of the costs of doing business. If you’re working with smaller vendors, you’ll have more options in terms of payment methods. Smaller vendors are often more flexible and more accommodating. If you’re in this boat, we recommend setting up automated payment methods using Jetti. Jetti offers automated payments via Stripe and bank transfer. It’s all done within Jetti, with no need to juggle or reconcile different systems.
STEP 3: Set up a vendor payment cycle
Option 1: Automated Payment Cycles
This is by far the easiest and most reliable way to pay your vendors. With automated payment cycles, invoices are raised by Jetti as soon as items are shipped. You can then set up your automated payment trigger, which will pay the vendor automatically via Stripe or bank transfer (supported in over 25 countries - and counting). Payments can be sent the next working day, but we recommend delaying payments by 14 days, if your vendors agree to this, to cover yourself for any returns which might be requested. With automated payment cycles you won’t need to do a thing, everything is managed for you by Jetti!
Option 2: Manual Payment Cycles
With manual payment cycles, invoices are raised in Jetti automatically when items are shipped. However, instead of payments being made automatically, you’ll need to review payments due in Jetti’s vendor payment report every week/two weeks. It’s simple to pay your vendors - all you need to do is select the invoices due and hit ‘pay’. You can also add references and notes if you need, or make corrections manually. Tip! Wait a week before you turn on automated payment cycles. That way, you’ll have a week to ensure all your commissions, cost prices and payment details are all ready to be automated.
STEP 4: Set up automated payment alerts
With Jetti, it’s easy to stay on top of your vendor payments. We recommend checking your payment report regularly. Here you’ll find all the stats you need to know, for example, how much you’re invoicing on your shipping and how much you owe your vendors. We also recommend you take action when you get any alerts from Jetti. We issue alerts when your payment method fails, so you can quickly push bounced payments through to avoid late payments. We’ll also notify you if you sell an item which has no cost price set. Without this, Jetti won’t know how much to pay your vendors, so it’s important to correct this as soon as possible.
STEP 5: Handling refunds
It’s inevitable that at some point, you’ll need to process refunds for your customers. This can prove problematic if you’re using a manual system, but with Jetti it’s no problem at all. Here’s how it works: A customer has bought a $100 item, but they want a refund. The vendor got 20% commission on the sale.
- The customer pays you $100. You pay your vendor $80.
- The customer is refunded $100 from your online store - now you’re $80 down!
- You need to refund $80, from the vendor back to you.
- Everything is now balanced out - and everyone is happy!
Don’t worry if this sounds complex; with Jetti it’s all automated and managed for you.
A few more tips to consider when automating your vendor payments:
- Tip 1: Sync live prices from your vendors through Jetti. This means you’re always selling at the correct vendor price. Avoid syncing manually - it could leave you open to making some costly mistakes.
- Tip 2: Don’t apply coupon discounts issued to your customers on the amount you invoice vendors. Say you want to offer your new customers a 10% discount. You should absorb this, not the vendor (don’t worry - Jetti handles this by default).
- Tip 3: Set the currencies for your vendors inventory feeds. If you sell in USD but your vendor is in CAD, Jetti can automatically adjust the prices. You can even ‘prettify’ prices (e.g. round-up to the nearest dollar), which is definitely something to think about if you’re working with several currencies.
Ready to Begin?
Is it time to start automating your vendor payments? Get in touch with our team for more information on how Jetti can maximise your time and your profit margins. Give us a call today.