Payment Flow from Customer to Vendors

This article covers the flow of money from your website customers to you and then from you to your Vendors. Please discuss tax compliance with your CA. We are not experts at accounting for different countries and only enable the money movement.

Website Entity

The first step is to decide what kind of entity your store is from a transaction perspective. There are two types –

Marketplace – Vendor sells directly to customer, you charge service fee

• In this case the customer invoice is made by the Vendor. Once the order is received, the merchant will make his invoice, pack the product and ship it to the customer
• The merchant will later raise a separate invoice to the vendor for the commission on the product
• Example – Suppose the Vendor offers a Product to you for $100 and you sell it for $150 on your platform. In this case Vendor will invoice your customer for $150 and you will raise a Platform fee of $50 to your Vendor for facilitating the transaction.
  In some countries, you may need to charge tax on top of $50 which means Vendor will get $150 – $50 – Tax

Dropshipping – You sell directly to customer and Vendor sells to you

• In this case the customer invoice is made by the Merchant. Once the order is received, the merchant needs to make the invoice and send it to the vendor. The vendor will print this invoice, pack it with the product and ship it to the customer.
• The vendor will raise a separate invoice to the merchant for the goods sold
• Example – Suppose the Vendor offers a Product to you for $100 and you sell it for $150 on your platform. In this case you will invoice your customer for $150 and vendor will invoice you $100..
  Vendor will get $100 from as per their invoice raised.

Your entity type will impact what kind of Invoice documents and Payment calculations you need to settle your Vendor payments.

Money Flow

The money flow will take place as per below:

1. Customer pays to your bank account: Your website customers will always pay you directly via your payment gateway on your website. Shipturtle has no role in this process and does not handle the money in anyway.
2. Shipturtle calculates money earned by Vendor:
   • Whenever an Order comes into Shipturtle, we break it into different parts for each Line item / Product. We then break down what the customer paid you into how much you need to retain, and how much is to be paid to your Vendor. This is done as per the Commission settings you configure on the app. The details are transparent between you and your Vendor.
     https://www.shipturtle.com/knowledge-base/managing-product-commissions-and-payments/
3. You review the payout calculations and create a consolidated “Commission document” for each Vendor:
   • It is infeasible to pay a vendor for each single order. Generally most merchants make a single payout every 15 or 30 days.
   • We have a utility for reviewing all orders and generating a single Commission document for all orders for a Vendor
   • https://www.shipturtle.com/knowledge-base/generating-commission-invoices/
4. Paying out to Vendor:
   • After Step 3, you can make the payment to the Vendor outside the app directly
   • Optionally we also have some excellent integrations with a few payment solutions like Paypal and Stripe using which you can make the payment directly from the app.
   • Please note we only act as an integrator and do not handle any of the money ourselves. It will be handled by the respective payment solution providers itself.
     https://www.shipturtle.com/knowledge-base/stripe-connect-integration-for-vendor-payments/
     https://www.shipturtle.com/knowledge-base/shipturtle-paypal-integration-for-vendor-payments/