PFR

 PFR is part of Amazon’s vendor payment reconciliation process. It allows Amazon to maintain positive cash flow by accounting for open deductions and potential claims before releasing payments to vendors. Essentially, it means Amazon pays vendors only when the net balance (after subtracting all pending deductions) is in favour of the vendor.

How It Works:

1. Amazon receives and records a vendor invoice for shipped goods.
2. Simultaneously, there may be open deductions such as:
   • Trade terms (e.g., agreed funding, co-op, rebates).
   • Operational chargebacks (e.g., prep, labelling, routing errors).
   • Disputed claims (e.g., shortages, price variances).
3. Before payment, Amazon offsets the total amount of open deductions and reserves (provisions) against receivables.
4. Only the remaining net payable amount is released to the vendor - or the payment is held entirely if deductions exceed the invoice amount.

Benefits for Amazon:

• Improved cash flow: Keeps funds within Amazon until disputes or deductions are resolved.
• Financial control: Reduces risk of overpaying vendors.
• Accounting accuracy: Ensures reconciliation of trade terms and chargebacks before payment.

Impact on Vendors:

• Delayed payments: Vendors may see longer payment cycles or reduced payment amounts.
• Cash flow pressure: Outstanding disputes or deductions tie up working capital.
• Need for monitoring: Vendors must track PFR balances in Vendor Central → Payments → Remittance Reports or Operational Performance reports.

Best Practices for Vendors:

• Regularly review chargebacks and disputes to clear outstanding balances.
• Maintain transparent documentation for deductions and promotional funding.
• Escalate unresolved PFR holds through Vendor Support or AVS.
• Align with Finance or VM teams to forecast net receivables accurately.

Why It Matters:
PFR affects vendors’ cash flow visibility and is a key reason behind payment discrepancies. Understanding how Amazon offsets payments under PFR helps vendors reconcile finances, anticipate deductions, and plan liquidity.

Example:
A vendor has $100,000 in invoices due but $30,000 in open chargebacks and $20,000 in unresolved co-op claims. Under PFR, Amazon holds $50,000 and releases payment only for the remaining $50,000 net receivable.

In short:
PFR (Provisions for Receivables) is Amazon’s accounting mechanism that offsets vendor payments against open deductions, trade terms, and disputes - ensuring Amazon pays only the net balance owed, which can delay or reduce vendor payouts.