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Settlement Process for Fynd Platform Brands

Finance support​

Please contact our Finance Support team for issues related to finance or reconciliations.

LevelModeEmail id
L1Finance Teamaccounts@gofynd.com
L2Rasika Jadhavrasikajadhav@gofynd.com
L3Finance supportvikysangoi@gofynd.com
note

While sending queries related to Finance, CC the Accounts Email ID: accounts@gofynd.com please expect a response with details from settlement@gofynd.com

Brand Settlement Process Introduction​

This doc will give you a step by step info on Brand/Seller data reconciliations & settlements across different sales channels. Moreover, it will help sellers like you in accounting with Fynd, absorbing invoicing & taxation patterns

Brand Onboarding​

It starts with understanding different solutions & sales channels offered by Fynd to a seller to boost its sales.

  • Seller then undergoes with signing a contract with Fynd for any of the following sales channels-

    1. Fynd / Uniket for Marketplace solutions,
    2. Fynd store / F-pos for in-store solution,
    3. Open API Brand Websites to build own websites,
    4. Open API 3rd party Marketplaces to access all marketplaces in one platform,
    5. Fynd Platform to manage own website & various services & getting access to above all sales channels

  • Seller now signups with its PAN & creates a business profile on Fynd Platform, then start uploading catalog & inventory, also start creating stores & feeding other informations.

  • Then above sales channels are added as per agreed commercials, and integrations are toggled

    • Example - payment gateway integration if collection & refunds done by Fynd

  • Business team introduces different POCs from each team over email or calls

    • SOPs related to each team’s process are ̉shared & explained.

    • This SOP is related to Finance team which starts from below -

KYC with PA​

  • Here comes the most important part of onboarding, i.e. getting KYC approved by Fynd’s Payment Aggregator (currently - Razorpay) in case where collection is handled by Fynd

  • Finance team will share an email, post explaining this SOP which will comprise of below -

    • Fill the Google form link to add the seller’s finance details

    • On receiving above details, finance team will share an invite from Razorpay (our PA) to do your KYC

    • Seller has to then signup using same link received over email

    • On signing up, Razorpay will redirect to update your KYC with all documents as requested on dashboard

      • Step by step guidance & documentation is available on Razorpay dashboard

    • In case of any issue, connect with Razorpay’s support team over chat or mail

    • Lastly, go to My Account >> Manage Team >> Invite new member >> settlement@gofynd.com >> Admin role

      • it will help us in tracking your KYC status, also you can check your KYC status on same dashboard
      • it takes 2-7 days, if same is pending for more than 7 days then get back to us

  • If u already had done KYC earlier with Razorpay then ignore above steps, share merchant id & snapshot of KYC done

    • Note - payments will be on hold till we didn’t receive active KYC status as its mandatory step

  • On Activation of the account with Razorpay, a linked account is created in Nodal account of Razorpay which helps in safeguarding customer collection of the seller lying in the Nodal Account

Commercial Structure​

  • Model 1: In the case of Fynd’s Marketplace (Fynd, Uniket, Fynd Store)

    • Fynd levies fixed charges like commission + processing fee on each order/bag on the Net selling price.
    • Fynd also charges variable fees like closing fee, packaging fee, marketing fee, logistics fee etc.

  • Model 2: In the case of the Brand’s own websites (Open API, Fynd Platform)

    • Fynd levies fixed charges like transaction fees on each order/bag on the Net selling price.
    • Fynd also charges variable fees like subscription fees, extensions fees, packaging fees, logistics fees etc.

  • Model 3: In case of 3rd party Marketplace (Open API)

    • Fynd levies fixed charges like transaction fees on slab-based Net selling prices.
    • Fynd also charges variable fees like Minimum Guarantee, packaging fee, logistics fee etc.

Reconciliation​

It starts with getting reconciled data from the system on 5days cycle basis.

  • Reconciliation is done on basis of Commercial finalized at different -

    • levels like - brand / L3 category / application / location / channel / across company
    • components like - commission, processing fee, transaction fee, closing & packaging, marketing, logistics
    • invoicing terms like - Monthly Net sales / on bag delivered / on bag packed
    • payment terms like - Aggregator / Credit Line / Monthly Invoicing

  • For Aggregator / Credit line model, interval of 5 days is currently followed as per below mentioned cycle-

    • 01-05 is reconciled on 06th
    • 06-10 is reconciled on 11th
    • 11-15 is reconciled on 16th
    • 16-20 is reconciled on 21st
    • 21-25 is reconciled on 26th
    • 26-31 is reconciled on 01/02nd of next month

  • For monthly invoicing model, 01-31 is reconciled on 01/02nd of next month

  • Data fetched in the above cycle will be as per order status mentioned in the agreement

    • e.g. - “delivery_done“ / ”return_accepted“ / ”bag_packed“ status marked on 2nd will come in 01 to 05 settlement report, where 2nd will be the recon date, 5th will be the settlement date & 10th will be the expected payout date.

  • For any disputed / escalated bags / orders, reconciliation will be handled fortnightly or monthly on confirmation & correct status marked in the system

  • For any data reconciliation other than bags / orders will be handled on case to case basis

Reports​

  • There is a Report section under “Finance and Payments >> Billing and Subscription” on Fynd Platform (top right corner). Sellers will have the access to this section on adding Billing toggle in Custom role under “Team” or to the Admin /Owner of the company created on Fynd Platform.

QG1

Figure 1: Export Button

  • Current Report section comprises of below 3 reports -

    • Settlement Report Description: It provides recon for bags on which commercials are applied by Fynd & which are settled or will be settled in future date
    • Supporting Settlement Report Description: It provides bag's info related to order, company, application, item, store, value & customer which can be further use as reference in other reports
    • Lost Report Description: It provides recon for bags on which claim is raised by seller

  • For fetching the relevant data seller needs to select 1 of the report, filter with - brand / channel (optional) & put dates as below for filtering -

    • Settlement/Supporting Settlement Report: filter on settlement date, which is 5th day of the cycle i.e. 1 to 5 its 5th, 6 to 10 its 10th & so on
    • Lost report: its recon date, i.e. when bag is actually reconciled & approved by finance team from dispute section it will be reflected here

  • Imp. columns for filtering/ summarising -

    • Settlement report: Bag ID, Transaction type, Company GSTIN, Brand Calculated Amount, Commission_Percent, Total Charges, Net_Payable, Payment Mode, Settlement Date, Expected Payout Date. From Commission_Percent to Net_Payable all are used to cross check the commercial terms.
note

Currently payout details are not added in the report section against at each bag level

Payment/Settlements​

Post reconciling data by finance team, summary is made & processed for payment.

  • Payouts are split & processed separately on payment mode basis i.e. COD & Prepaid orders

  • Payouts are also dependent on the payment terms as mentioned in the commercials like - Aggregator / Credit Line / Monthly Invoicing

  • For Aggregator model , Fynd follows 5 days settlement period from the settlement date mentioned in the report

    • Expected payout date is last day of settlement cycle, 5th + 5 days i.e. on 10th for 1 to 5 cycle & so on.

  • For Credit line, Fynd team follow ups as & when credit line is about to exhaust for getting receipt of the service fees

  • In case where credit line is not exhausted or in case of Monthly Invoicing, amount is due in 7 days post sharing of invoice or as per timeline mentioned in agreement

In case of any additional disputes or claims or outstanding invoices for cross line business model, all adjustments are done in running payouts

  • Additional disputes like loss, fake & damage products claimed by seller

  • TDS on commission claimed by seller

  • Excess returns over sales creating negative balance from previous cycle

  • TCS on returns not adjusted against sales

  • Outstanding Invoices or exhausted credit line

e.g. in tabular form -

| |Purpose | Net payout | Settlement Period |Expected Payout date |Payment date | |--- |--- |--- |--- |--- |--- | |1 |Net payable in Aggregator model |100 | 06-10-May |15th May |20th May | |2 |Negative balance from old cycle |-50 | 01-05-May |10th May |20th May | |3 |TCS on returns for last month |-150 | 01-30-Apr |7th May |20th May | |4 |Outstanding invoice last month |-200 | 01-30-Apr |7th May |20th May | |5 |Loss / fake / TDS claims |200 | 01-10-May |15th May |20th May | |6 |Net payable in Aggregator model |400 | 11-15-May |20th May |20th May | | |Net payable = |300 | | | |

  • Payout will not be done in the case where there is a debit balance for the settlement cycle & till it didn’t get adjusted against the next settlement’s payout, then the final net balance will be released.

Once payouts are released, payment advice will be shared on mail having UTR details & a settlement period, upon successful transaction.

Other claims​

  • For wrong or damaged product, or for bag lost product, a brand can claim or raise a ticket with Fynd’s operations team on support desk as per operation’s SOP.

  • Same will be investigated by our operations team with delivery partners & confirm on resolution for the same ticket.

  • Then they will update the status in system, upon which finance team will get a record for the claim.

  • Also for TDS certificates shared by seller for claiming TDS on commission will be processed with above claim.

  • Finance team will then process the claims on every 10 days cycle.

Accounting​

Model 1 - Fynd Marketplaces

  • For prepaid orders,

    • Fynd doesn’t record the transaction amount as its sales proceeds of seller & amount is held with Payment Aggregator in its Nodal Account.
    • Upon the delivery of goods less returns & cancellations, for prepaid orders, Fynd just books commission invoices & commission withdrawal from Payment Aggregator.

  • For cod orders,

    • Fynd records receivable from Delivery partners so that it can further settle to the brand.
    • Fynd books commission invoices & adjusts them against the amount collected from Delivery partners to settle the net payable to Brands.

  • Other fees like marketing, logistics, etc are booked if agreed in a commercial on monthly basis.

Model 2 - Brand websites & Fynd Platform

  • In case of collection done by Fynd, same entries as per above.

  • In the case of collection done by Brand, only service invoices will be booked.

  • Fynd raises separate invoices for subscriptions & extensions as opt on Fynd platform.

  • Other fees like packaging, logistics, etc are booked if agreed in a commercial on monthly basis.

Model 3 - Open API Marketplace

  • Fynd books minimum guarantee or commission Invoices based on slabs.

All Invoices & Credit notes are booked on monthly basis following the monthly cycle from 26th to the 25th of next month for book consolidation with RIL except for slab-based commercial in Model 3.

Invoicing​

  • Invoice / Credit Note (CN) is prepared on a Company cross GSTN basis & periodicity for same is monthly.

    • for Modal 1 & 2, 26 Apr to 25 May invoice will be prepared on 26th May
    • for Model 3 where invoicing depends on the monthly slab based sales the period is followed 1st to 31st & booked on 1st of next month.

  • Entire settlement reports of the above period are consolidated & summarised,

    • if total charges are positive for that company at gstn level than invoice is generated
    • if total charges are negative for that company at gstn level than CN is generated.

  • Other Invoices & CN are booked in the month of availing services or any reversals in services by 26th / 31st of the month & shared by 1st or 2nd of next month.

  • Digitally signed Invoice / CN concise of -

    • Invoice / CN no & date
    • IRN no & QRcode of e-invoice
    • Our & Seller’s GST details
    • Description & Amount
      • a sum of all taxable services
      • GST (IGST - 18% for interstate sale & CGST, SGST - 9% for intrastate sale)
    • Our bank account details

  • Same Invoice / CN is shared by 02nd/03rd of next month with sellers along with consolidated settlement reports for that month

Outstanding Invoices​

Check

An invoice which is outstanding for more than 7 days from the date of sharing it & no collection available in cross line business from which this invoice can be adjusted then it will acquire following approach, depending on the business relation & final calls from product growth managers/directors.

  • Suspension of services & Penalty clause applicable

    • Suspension of operational services i.e. OMS / orders accepting initially & if still outstanding not cleared within next 7 days then channel archiving / suppression of account at platform.
    • Two such consecutive invoices outstanding without any dispute raised by the seller will be applicable for interest calculation @ 18% p.a. on the entire outstanding amount (continuing with current & upcoming invoices).
    • Such seller will be marked as defaulter till it will clear entire outstanding.
    • Further, demand notice will be sent & legal proceedings will be done till the outstanding interest amount is recovered.

  • Same goes for credit line, where post 7 days of credit line exhaust if seller still not willing to clear the outstanding & top ups the credit balance

Taxation​

  • GSTR1 -
    • The amount of GST which is applied in our invoices / CN is considered for output GST liability to be paid to the government
    • The sellers can get input credit against their output GST on sales
    • They can find the summary of the same in GSTR2A (its a reconciliation of the service invoice they received from us)
  • TCS on GST
    • TCS means Tax collected at source, as per GST to avoid loss/leakage of sales reporting, govt had put this burden on E-commerce operators of deducting 1% of net sales (VOG) done by sellers through E-commerce / Marketplace
    • This 1% TCS is therefore deducted from payouts done to Sellers
    • The sellers can get input credit against their output GST on sales
    • For TCS data, “bag_invoiced” less “canceled / rto / return” bags to get net data on basis of which we finally pay to the government & the same is deducted from payouts against the respective bags.
  • TDS u/s 194-O
    • TDS on Commission u/s 194O @ 0.75% (till March 21) is applicable on the gross amount (incl. GST) of sales or services or both.
    • E-commerce operators have to deduct & deposit Tax to govt. either at the time of receipt of the amount from the end customer to its account or at the time of settling with the seller by any mode, whichever is earlier.
    • In absence of Pan/Aadhaar, TDS is to be deducted @5% (Section 206AA has been amended accordingly).
    • Fynd will share the TDS certificate on a Quarterly basis of such deduction to the seller & the seller can claim under IT returns.

TDS reimbursement​

  • TDS on Commission u/s 5% is applicable on net commission value. (excl. GST).
  • The brand has to deduct TDS against our commission invoices & send for reimbursement with the valid TDS Certificates, quarterly. (TDS on net figure = Commission invoices amount less credit note amount).

[Image: image (9).png]

  • TDS reimbursement will be processed in 2-3 days on submission of TDS certificates by seller. Commission invoices & credit notes booked at Seller’s end should match with Fynd.
  • Who will not deduct TDS -
    • A seller with no valid TAN no / Seller with proprietorship business lower than 1cr
    • A seller whose commission invoice aggregate value not exceeding 15k in a financial year

Disputes and Queries​

  • A brand can raise any query pertaining to commission or tax calculation or sales mismatch or transaction skipped for the same report within 7 days of receipt of the same & it will be mutually resolved before processing the next payment.

  • For wrong or damaged product, a brand can claim within 3 days from receipt of the product at store & same will be resolved within next 7 days (in line with operations SOP).

  • For bag lost product, a brand can claim within 45 days from picked of product from the store (in line with operations SOP).

  • For above both claims will be processed in cycle of every 10 days after status updated in our system.

  • For invoice or credit note or reconciliation reports or payouts not received, the brand has to intimate within 7 days of each cycle due.

  • For credit line or outstanding invoice related, brand has to raise query within 2 days of 1st intimation / reminder sent from Fynd.

  • A brand can raise a query pertaining to commission invoice & consolidated report within 15 days of receipt of the same & it will be mutually resolved before the next invoice due date.

  • For taxation-related queries, a brand can raise disputes within 15 days after each tax filing period is passed so the same can be rectified in upcoming tax filing.

  • Send certificate within one Month. Fynd will pay TDS in cycle of every 10 days after receipt of TDS certificate or can raise a query if in case any error in TDS certificate & same can be mutually resolved.

  • Ledger reconciliation & sign-off can be entertained quarterly or monthly depending on audit requirements.

note

Above all timelines will be strictly followed from 1st Sept 21 & if any query other than taxation part came to post this timeline, will be settled separately only on business approval in every 3rd week.

Follow-ups​

Follow-ups from our side to sellers are done for:

  • Ledger confirmations quarterly/yearly till sign-off

    • It is needed to cross-verify Fynd’s bookings of the invoice, CN , payments etc. same as reflected in the seller’s books.

  • Outstanding -

    • In the case of Model 2 /3 or in case of credit line / outstanding invoices where brand will pay to Fynd.

  • Debit balance (Negative balance) -

    • In the case where sale is less than returns or no sale only returns for a period more than 30 days / 6 or more settlement cycles having a cumulative negative balance, so the same seller has to pay back to Fynd.

  • TDS certificates -

    • In the case of Open API Ecom / MP, where the seller has deducted TDS on commission & paid net amount, they have to file TDS returns & share certificate with Fynd.

  • GSTR1 mismatch -

    • In the case where there is an issue in GSTR filing if the seller has wrongly booked an invoice in name of Fynd which was raised to a customer, the same has to reverse in the next GSTR returns by the seller.