This article explains the flow of money from your website customers to your business and then from your business to your vendors. The payment process in ShipTurtle is transparent and straightforward, ensuring that both the marketplace owner (you) and the vendors have a clear understanding of payment calculations.
1) Marketplace vs Dropshipment
Before understanding the money flow, it's important to determine what type of transactional model your marketplace follows. This decision impacts the invoice documents and payment calculations needed to settle payments between you and your vendors.
- Marketplace Model: The customer pays the marketplace owner, who then splits the payment and pays the vendors based on commission settings.
- Dropshipping Model: The customer pays the marketplace, and the marketplace then sends the payment to the vendor, typically minus the merchant's margin.
For more details on the differences between these models, refer to the article: Marketplace vs Dropshipment.
2) Money Flow Process
Step 1: Customer Pays to Your Bank Account
- When a customer places an order, they pay directly to your bank account via the payment gateway integrated into your website (e.g., Stripe, PayPal).
- ShipTurtle does not handle any of the customer payment directly and plays no role in this transaction.
Step 2: Payout Calculation
- When the order is processed in ShipTurtle, we break down the payment based on the products in the order.
- We calculate the amount you retain and the amount you owe to the vendor. This is based on the commission settings you have configured.
- The payout calculation is transparent and visible to both you (the merchant) and the vendor, ensuring clear communication regarding earnings and payouts.
Step 3: Finalizing the Payout
- After calculating the payout, you can review the details and finalize the payout calculations.
- ShipTurtle will generate a commission document for each vendor that outlines their payment and the commission you retain.
- The commission document includes detailed information about each transaction and ensures the vendors have a clear view of their earnings.
Step 4: Payment Transfer
- You can transfer payments to your vendors using ShipTurtle’s integrated payment providers such as Stripe or PayPal. This makes the payment transfer process seamless.
- Alternatively, you can make payments outside of ShipTurtle using your preferred method and then record the transaction details within the platform for future reference.
Step 5: Recording Transactions
- Once the payment transfer is made, you can record the payment details against each order in the system. This ensures you have an accurate record of all transactions for bookkeeping and reporting purposes.
3) Important Notes
- ShipTurtle is an integrator: While ShipTurtle enables the payment flow, we are not involved in holding or managing the funds. You are responsible for ensuring that payments to vendors are processed correctly.
- Accounting and Tax Compliance: ShipTurtle’s system calculates payouts based on the commission structure you configure, but we are not accounting experts. It’s important to rely on your accountant to ensure that you comply with local tax laws and guidelines.
- Transparency: All payout calculations, fees, and commission structures are visible to both you and your vendors, providing full transparency in the payment process.
Summary
The payment flow in ShipTurtle works smoothly and is designed to ensure both marketplace owners and vendors can efficiently manage transactions:
- Customer payment goes to the marketplace owner via the website payment gateway.
- Payout calculation is done based on the configured commission settings.
- You review and finalize the payout, generating a commission document for each vendor.
- You transfer the payment using integrated payment providers or manually, if preferred.
- You record the transaction for bookkeeping and reporting.
By following this process, you can ensure that payments between you and your vendors are handled efficiently, with clear visibility and accuracy.
If you’re stuck, reach us at team@shipturtle.com or open a ticket on the support page.