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How to pay your vendors?

At Garnet, we have seen hundreds of marketplaces growing, onboarding vendors, and earning commissions. We learnt some traps for early stage marketplaces regarding vendor payout that we'd like to share with you here.

Note that this is for your reference only, your business can have different constraints that are not reflected in this guide. You can contact us if you are still unsure after reading this guide.

1. As a start, pay your vendors manually and monthly.

Do not directly go to a costly automated payment system. Talk with your vendors to understand which payment system suits your collaboration best.

As a start, you can pay your vendors at a defined frequency such as Every first Wednesday of each month. It allows you and your vendors to set a predictable payment schedule.

On payout day, reserve yourself an hour to go through all your vendors' Finance view, filter by the correct time frame, and manually send the payouts.

From that process you will learn:

  • How many days can you wait before paying your vendors.
  • How many days you can allow your customers before to return or refund their order.
  • Where your money is going.

From these lessons, you can write relevant payment terms, refund policies, and return policies.

2. Above 20 vendors, consider manual payout integration

At some points paying out vendors manually can be cumbersome and error-prone. We usually see the transition happening when the number of vendors exceeds 20, or when the marketplace has short payment terms (less than 10 working days).

At this stage you can consider using Garnet's Stripe integration or Garnet's Paypal integration, and pay them manually (see below).

3. Above 100 vendors, consider automated payout integration

There will be a point where you will need more mental awareness and the time to pay all of your vendors manually, accurately, and periodically. At this stage, consider and automated or custom payout strategy (see below).

Next steps

Use Garnet's payment integrations to use the best strategy to pay your vendors.