Amazon Settlement Accounting: From Payout to True Margin

An Amazon payout is revenue minus everything Amazon deducted before paying you: referral fees, FBA fulfilment fees, storage fees, advertising charged to the account, refunds and their fees, promotional rebates, and a reserve held against future returns. On a typical account the deposit is 55 to 70 percent of gross sales. Booking the deposit as revenue understates sales by a third and hides every cost line that a seller needs to manage.

Each settlement report, usually fortnightly, lists transactions by type. The main categories and where they belong:

Tools such as A2X and Link My Books map these automatically into Xero or QuickBooks and split settlements that straddle a month end. Without one, the mapping is done from the report by hand, which works but does not scale past a few marketplaces.

In the US, Amazon collects sales tax on marketplace sales in every state and remits it. In the UK and EU, Amazon is the deemed supplier for VAT on many consumer sales, particularly by non-established sellers. In both cases the tax appears in the settlement and must be kept out of revenue and out of your own tax return. A seller who books gross sales including marketplace-collected tax overstates revenue and, in the UK, risks paying the VAT twice.

Gross margin needs cost of goods by unit sold, and that needs landed cost: purchase price plus freight, duty and inbound shipping to the fulfilment centre, allocated per SKU. Stock sits in four places, at the supplier as a deposit, in transit, in FBA and in any 3PL or your own warehouse, and the balance sheet should show each. Amazon's inventory ledger reconciles FBA units; the rest comes from your own records. Perpetual inventory by SKU is the target; a monthly count and adjustment is the minimum.

Sponsored Products and Sponsored Brands are either invoiced separately or deducted from the settlement. Either way the spend belongs against the marketplace it drove, so advertising cost of sales can be measured per channel. The number that matters is total advertising as a percentage of total sales on that channel, tracked monthly, alongside contribution margin after ads.

• Gross sales, refunds and net sales by marketplace and by country.
• Marketplace fees, fulfilment fees and storage as separate lines, each as a percentage of net sales.
• Advertising by channel and as a percentage of sales.
• Gross margin by SKU, and contribution margin after advertising by SKU and channel.
• Inventory on hand by location, in units and at cost, with weeks of cover.
• Amazon receivable including reserves, reconciled to the last settlement.
• Marketplace-collected tax reconciled to the platform's tax report, and your own VAT or sales tax liability separately.