Amazon firms facing collapse as US tech giant warns it will hold back their proceeds for weeks

Amazon has been accused of pushing small businesses to the edge of collapse after warning it would hold onto thousands of sellers’ cash temporarily.

The US tech giant told small firms using its platform in the UK and continental Europe that it will withhold their sale proceeds for over a week, triggering fears businesses will not have the cash to keep going.

Just days earlier, rival Etsy was forced to U-turn amid threats of a boycott from UK vendors after holding onto 75 per cent of some sellers’ takings for more than a month. 

Now, Amazon has told sellers it will not credit their accounts immediately when they make a sale, but they will have to wait around a week after a product has been delivered.

Cash grab: Amazon told small business owners they ‘may experience a one-time cashflow disruption’

The tech titan told small business owners they ‘may experience a one-time cashflow disruption’. 

But sellers and the Government’s small business czar said this was just long enough to bring a firm to its knees, especially given painful inflationary pressures.

Small business commissioner, Liz Barclay, said: ‘A small business can easily go to the wall if owed £100 for a week.’

Without cash on reserve to tide themselves over the fortnight gap, business-owners will be forced to borrow or miss bill payments.

Amazon said around 15 per cent, or 33,750 of the 225,000 smaller sized firms using its marketplace in Europe, could be impacted by the situation.

A spokesman for the tech giant said: ‘This policy was introduced in August 2016, and there will be no impact for over 85 per cent of sellers in Europe.