Alibaba.com’s Payment Terms service allows importers in the US to order products with a small deposit upfront (typically 30% of order value), then pay off the balance (typically 70%) up to 60 days later.
This deferred payment service helps small businesses manage and improve their cash flow instead of having to tie up their capital right from the start.
The application process is simple, quick, and done completely online. There’s no need to submit paperwork or wait weeks for approval as it normally does when small businesses try to get loans approved to finance their product imports.
Keep reading, and learn how Alibaba.com Payment Terms – in this Q&A with Alibaba’s New York City office.
What are the top benefits of using Alibaba.com Payment Terms?
Here are a few examples:
Easy application process. To get started, a buyer must fill out a two-page online application. Applying never impacts their credit score.
Improved cash flow. Take up to 60 days to pay for orders. Buyers are sometimes required to pay in full before their products are shipped. With Alibaba.com Payment Terms, buyers have time and options for how to handle their money.
No fees for using the service. If the buyer pays back the amount of the purchase terms on time, using Alibaba.com Payment Terms is free.
Save on transaction fees. Alibaba.com charges a low 2.95% fee when making credit card transactions, and other fees are possible when using other payment methods such as TT or ACH. When using Alibaba.com Payment Terms, payments incur no fee.
How does Alibaba.com Payment Terms work?
This is how it works:
2. The interested buyer fills out a simple and fast application form and submits it for review.
3. Buyers with an established credit line can receive an instant decision. Otherwise, it takes about 24 hours to receive a decision.
4. When the buyer is approved, their new credit line will be displayed on their Alibaba.com Payment Terms dashboard.
5. When a buyer is approved, they can start using that credit line with participating sellers. The buyer should make sure to mention that they want to use Alibaba.com Payment Terms when negotiating with a seller.
What is required to be approved for a credit line?
Here are the requirements:
1. The interested buyer has to have an Alibaba.com account
2. They have to be based in the US
3. They have an EIN or a tax ID
4. Buyers need a valid email address from a business domain. For the buyer’s protection, domains that can be used for personal accounts, such as Gmail, Yahoo, iCloud, etc. can’t be used.
What is covered by Alibaba.com Payment Terms?
Normally, a buyer will pay two installments on an Alibaba.com order: the initial deposit that is due when placing an order (typically 30% of order value), and the remaining balance (typically 70%) that is paid when the order ships. Alibaba.com Payment Terms applies to the remaining balance and gives the buyer up to an extra 60 days from shipment, or invoice issuance date, to pay off that amount.
Is it mandatory to pay a deposit?
A 30% deposit is standard, due at the time of the order. However, terms may vary depending on your negotiation with the seller.
What is the maximum amount covered?
The amount depends on how much credit the buyer was approved for, ranging from US$5,000 up to US$2 million.
Does the 60-day countdown start from the order date, or the shipment date?
The 60-day extension starts when the seller ships the product. This is when an invoice is issued. The due date for the remaining balance is typically 60 days from this invoice issuance date.
Is this service only available for US buyers?
Alibaba.com Payment Terms is available to buyers in the US right now. We are working on making this service available to Canadian buyers as the next step.
Does it only cover suppliers in China, or also other countries?
Alibaba.com Payment Terms only covers select suppliers in China.