Amazon sales in Xero, one payout at a time

Why one invoice per payout

• It reconciles. Your bank feed shows one Amazon deposit; Xero suggests the matching invoice and you click OK.
• It's what your accountant needs: sales, refunds and each kind of Amazon fee as separate amounts, not every order.
• It stays small. About twenty-six invoices a year instead of thousands of orders that still wouldn't match the deposit, because Amazon pays in lump sums with fees and reserves already taken out.

How the invoice works

Each payout becomes a sales invoice to the contact Amazon, dated the day Amazon paid you, with the settlement ID in the reference. Income lines are positive, fee lines are negative, and there's no tax on any line (Amazon's sales tax is its own line, which nets out). The invoice total is the deposit. When the deposit lands in your bank feed, match it to the invoice: the invoice is paid and the bank balance is right.

When Amazon's fees are more than your sales, Amazon charges your card or bank instead of paying you. That payout becomes a bill from Amazon with the signs turned round, and you match the payment to the bill.

A worked example

A made-up two-week payout of $5,821.30, with MyProfit's recommended accounts and codes:

The invoice total is exactly the $5,821.30 that reached the bank. Sales and reimbursements are income; referral fees, FBA fees, storage, promotions and ads are expenses; the $122.40 Amazon held back is still your money, so it goes to a current asset until Amazon releases it.

Which settlement lines go where

Amazon's settlement report has dozens of line names. MyProfit sorts each into one of these categories, and each category posts to one account, MyProfit's recommendation or one of yours:

The lines that trip people up

• Sales tax. In most states Amazon collects the sales tax and pays it to the state itself, so in the settlement the tax comes in and goes straight back out. Whatever is left goes to Amazon Sales Tax Collected, a current liability, never to income.
• Refunds are negative sales lines: they reduce Amazon Sales. The fees Amazon gives back come in on the fee lines.
• Reserves. Amazon sometimes holds part of a payout and releases it in the next one. The held amount goes to a current asset and comes back out when Amazon releases it. A payout your bank turned down and Amazon re-sent belongs there too.
• Negative payouts become a bill, as above.
• Ads. If Amazon charges your card for Sponsored Products, the ads aren't in the settlement: record the card charge as advertising. If Amazon takes them from the payout, they're an Advertising line on the invoice.
• Cost of goods isn't in the settlement at all. Record inventory purchases as you do now.

Doing it by hand

1. In Seller Central, go to Payments, then All statements, and download the Flat File V2 for the payout (how to read it).
2. Total the amount column by line type with a pivot table on amount-type and amount-description, and group the totals into the categories above. They should add up to the total-amount in the first row.
3. In Xero, create a new invoice to the contact Amazon, dated the deposit day, with the settlement ID as the reference. Set amounts to No tax, add one line per category with its account, and check the total equals the deposit. Approve it.
4. When the deposit reaches your bank feed, reconcile it against the invoice.

It works, but it's an afternoon every couple of weeks, and Amazon adds new line names now and then.

Or let MyProfit send it

MyProfit loads every Amazon settlement report for you and sends each payout to Xero as exactly the invoice above:

• Connect: on MyProfit's Xero page, choose Connect to Xero, sign in and pick the organisation.
• Map: keep MyProfit's recommended accounts (created in your Xero on the first send) or pick your own for each category, with the last three payouts' amounts beside each one.
• Choose whether invoices arrive as drafts for your bookkeeper to check, or approved and ready to reconcile.
• Preview the exact invoice before it goes, then send one payout or every payout not sent yet. Each carries the settlement ID in its reference, so a payout is never sent twice.

MyProfit only creates its accounts, the Amazon contact and the invoices; it never changes or deletes anything else in your books, and you can disconnect at any time. The same payouts also get a profit figure in MyProfit, after the landed cost of the units sold. See it in the sample store, or read how the connection works. It's part of the Seller plan, $19.99 a month (US dollars), with a 30-day free trial.

Questions

• Which Xero plans? Any plan that can raise invoices and bills. Amazon pays about twice a month, so it adds two or three invoices a month.
• Which Amazon payouts? Amazon.com payouts in US dollars.
• Does it change my existing books? No. It adds its own accounts (only those you don't map to yours), the Amazon contact, and one invoice or bill per payout you send.
• Several organisations? If your Xero sign-in covers several, MyProfit asks which one the payouts go to.

The payout above is an example; real payouts carry more categories. Xero is a trademark of Xero Limited.