Amazon’s Payment Terms and Their Impact on Shortages

By Achraf Hamidi, Product Manager - Deductions Navigator for Amazon

Last Updated March 17, 2025

8 min read

In this article, you will learn:

Payment terms at Amazon
Quick Pay Discounts (QPDs)
The impact of payment terms and QPDs on shortages

_____________________________________________________________________________________________

Amazon uses Payment Terms to define when vendors receive payment relative to the date an invoice is issued. These terms are outlined in vendor agreements and can be negotiated during initial Vendor Central account enrollment and annual trade negotiations.

Amazon often negotiates for longer Payment Terms and/or will offer Quick Pay Discounts (QPDs). For 1P Amazon suppliers, these terms can have a lasting impact on cash flow.

Understanding Payment Terms

Payment Terms determine Amazon’s payment timeline from the invoice date. Amazon's payment terms can vary, but they are usually in 30-day increments. In the past, the most common payment term period was NET 30-60 days. Lately, Amazon has been pushing for longer periods of 60, 90, or even 120 days after an invoice is issued.

For Amazon suppliers, there are various benefits to opting for longer payment terms, but they can also strain finances, making it difficult to cover costs like materials, production, and shipping while waiting for payment. It’s crucial to conceptualize longer payment terms as an opportunity to negotiate an alternative benefit, such as lower trading costs.

Payment Terms are broken down into either End of Month (EOM) or Net (NET) terms, each tied to a specific way of conceptualizing when payment is due to the vendor.

NET Payment Terms

NET Payment Terms are a standard invoice payment term at Amazon. 30 NET payment terms means Amazon has 30 days from the invoice date to pay.

For example, for an invoice dated January 1st, a supplier on 30 NET terms would receive payment on January 31st.

A horizontal timeline labeled “Invoice Date” on January 1 (blue marker) and “Invoice Due” on January 31 (teal marker). A highlighted bar between January 1 and January 31 shows a 30-day period.

EOM (End of Month) Payment Terms

When it comes to EOM terms, a payment is due at the end of the month in which the invoice was received, plus the specified number of days. EOM terms can significantly extend a supplier’s wait time compared to NET terms.

For example, a supplier on 30 EOM terms means that even if an invoice is issued on January 1st, the 30-day countdown wouldn’t start until the last day of January, and payment would not be due until March 2nd.

A horizontal timeline labeled “Invoice Date” on January 1 (blue marker) and “Invoice Due” on March 2 (teal marker). Between January 31 and March 2, there is a highlighted span labeled “30 Days.”

What are Quick Pay Discounts (QPDs)?

Amazon offers Quick Pay Discounts (QPDs) to speed up vendor cash flow while reducing Amazon’s costs. In exchange for faster payment, Amazon deducts a percentage from the supplier’s invoice—typically 1-3%.

For example, a supplier on 30 NET terms with a 3% QPD, may get paid by Amazon in 15 days, but 3% will be deducted from the total invoice amount.

A timeline graphic illustrating an invoice payment process with a quick pay discount (QPD). The timeline begins on January 1 with the invoice date. After 15 days, on January 16, payment is received with a 3% deduction from the total invoice amount. The final marker on the timeline is January 31, indicating the invoice due date.

While this provides quicker access to cash, it also lowers the supplier’s overall profit margin, making it essential to balance payment speed with profitability.

How Payment Terms Affect Shortages

Sometimes payment terms have a complex impact on shortage deductions. This process often looks something like this:

Amazon deducts QPD first: If a supplier has agreed to a QPD, Amazon immediately reduces the payment before verifying whether all inventory was received.
Shortage deductions come later: Amazon later claims a shortage, and they deduct even more money from a future payment.
Double hit to revenue: This means suppliers can lose both the QPD discount and additional funds from a shortage deduction—even when the deduction is invalid. In some cases, this could result in losing up to 10%-15% of your invoice.

These terms can have a variety of impacts, but we’ll just focus on two examples:

Example 1: QPD and Shortage Deductions

A supplier with 30 NET terms and a 3% QPD sends an invoice for $10,000 on January 1st. Since they’ve agreed to a Quick Pay Discount, Amazon pays early on January 16th, but deducts 3%, leaving the supplier with $9,700 instead of the full amount.

Then, on February 10th, Amazon claims a $1,000 shortage and deducts it from a future payment. In the end, instead of receiving the full $10,000, they only get $8,700—losing $1,300 (13%) due to both the QPD and the shortage deduction.

A timeline graphic detailing an invoice payment process with deductions. The timeline starts on January 1 with an invoice of $10,000. On January 16, a payment of $9,700 is received with a 3% QPD deduction (-$300). On January 31, no QPD payment is due. On February 10, Amazon claims a $1,000 shortage and deducts it from a future payment. The process spans over a month.

Example 2: QPD, Shortage Deductions, and Redisputing

A supplier with 60 NET terms and a 2% QPD might expect to be paid in 30 days with a 2% deduction. For an original invoice of $19,680, they would typically receive $19,286 after the QPD discount.

However, in some cases, Amazon may initially pay only a portion of the full payment early in order to meet the QPD requirements and then pay the remaining amount later when they can deduct a second QPD.

For example, on an invoice of $19,680, Amazon may pay about 3% early–about $566—and deduct $18,720 on the same payment. This allows Amazon to technically meet the QPD payment terms while significantly delaying the bulk of the payment on the invoice. By structuring payments this way, Amazon can retain most of the supplier’s funds for weeks or months, improving their own cash flow while still benefiting from the early payment discount.

The supplier can dispute the remaining amount, but the claim will be denied because the deduction is not a shortage or performance-related deduction. Then, four days after the NET 60 due date (Day 64), Amazon could release the remaining 97% of the invoice. However, because this is considered a new payment, Amazon can apply the 2% QPD deduction again, meaning the supplier only receives $18,346 (see the image below).

A timeline graphic illustrating an invoice payment process with deductions and disputes. The timeline starts on November 27 with an invoice of $19,680. On December 27, a payment of $566 is received with a 2% QPD and shortage deduction, totaling -$18,720 and -$394. On December 29, a dispute for $18,720 is filed but denied. On January 26, no QPD payment is due. On January 30, a payment of $18,346 is received with another 2% QPD deduction (-$374), amounting to 93% of the invoice value. The total process spans 64 days.

In the end, the NET 60 supplier could wait 64 days to receive only 93% of their invoice due to repeated QPD and shortage deductions.

This ongoing cycle of deductions, disputes, and re-applied QPDs makes it difficult to reconcile payments and predict cash flow. Understanding how these deductions stack up over time is critical for Amazon vendors to mitigate financial losses and ensure that their payment terms align with their business needs.

While Amazon recommends longer payment terms (e.g., 90 days) to reduce shortages by allowing more time for receipt and matching, this will not necessarily eliminate shortages. Instead, a tradeoff develops between potentially fewer deductions and maintaining cash flow.

It’s also important to note that although QPDs are deducted each time a shortage is reversed, the total QPD amount remains the same as if it had been applied once upfront. This means Amazon isn’t necessarily profiting extra from the pay/deduct method, but the repeated deductions and repayments still create major reconciliation challenges. This makes it harder to track and predict cash flow, ultimately impacting your bottom line.

Next Steps

Payment terms with Amazon impact more than just when suppliers get paid—they also affect how much they actually receive. To avoid revenue loss:

Negotiate payment terms that benefit the supplier and Amazon
Weigh the trade-off between QPDs and profitability

Continue Learning with SupplierWiki

For more free educational content like this (eBooks, Cheat Sheets, Webinars, and Articles), sign up for our newsletter, or visit our website. We cover material essential for retail suppliers, especially related to revenue loss at Walmart, Amazon, CVS, Walgreens, Target, Kroger, Lowe’s, and Home Depot.