SELLING ON AMAZON & ACCOUNTING FOR IT
A GUIDE FOR AUTO DEALERSHIPS
HOW AMAZON PAYS
Amazon Payments transfers funds directly to the bank account you specify in
your seller account via an Automated Clearing House (ACH) or electronic
transfer. Note that Amazon Payments cannot make payments to your credit card
or PayPal account and cannot issue funds in the form of an Amazon Gift Card.
PAYMENT FREQUENCY
The Statement View in your Payments Report shows you when and how much
you will be paid. Amazon updates this information automatically so that it always
shows up on the Payments report.
The Payments report will sometimes display an Unavailable Balance. This is
normal when selling with Amazon. An unavailable balance usually indicates the
amount of funds that has been reserved to ensure that you have enough funds
on hand to fulfill any refund requests from shoppers or other types of
chargebacks. Within the payments report section of your seller account you may
also download the list of SKU’s sold along with the quantities of each for that
specific statement period. The statement period is noted in your individual seller
agreement, typically these periods are two week intervals.
ACCOUNTING METHODS FOR SHIPPED INVENTORY
Since Amazon only disburses funds every two weeks, it makes accounting for
shipped inventory within the automotive parts department unconventional. There
are two basic options:
1. Daily closing method: Create a parts invoice for the shipped item, and
close the invoice upon shipment. Reconcile the accounting schedule
when the Amazon payment is received.
2. Bi-Weekly closing method: Create a parts invoice for the new payment
period and bill the inventory as it ships, leaving the invoice open.
Reconcile the billed parts on the un-posted invoice to the transactions in
the payment report. Close the invoice when payment is received from
Amazon.
With either method we highly recommend creating a specific customer ID within
the parts customer section of your DMS. Remember that all the shopper
information already resides within your Amazon seller account, so transposing
this information into your DMS may be considered redundant and an increase in
privacy liability. Since the payments made to you come from Amazon, we
recommend keeping your customer as “Amazon” and leaving the more sensitive
shopper information within your Amazon seller account.
DAILY CLOSING METHOD – DETAIL
With the daily closing method, your department will bill each part shipped that
day and close the invoice(s). This can be done with individual invoices (by order
ID) or a daily invoice (by order IDs shipped on a specific day).
Benefits:
• Parts are posted out of your inventory daily
• No work in process
Drawbacks:
• Creates an accounting schedule log
• More difficult for the accounting department to reconcile to the received
Amazon payments
BI-WEEKLY CLOSING METHOD – IN DETAIL
The bi-weekly closing method uses the same theory as to billing the part when it
is shipped, but in contrast it leaves the invoice in a open status. When your
department ships an order the item(s) gets billed to the open invoice and left
open for the next day’s orders. This allows for the shipped items to be deducted
from on-hand inventory, but the invoice can be reconciled to the Amazon
payment before it is closed or posted.
Benefits:
• Creates a smaller accounting schedule log
• Easier for the accounting department to reconcile to the Amazon payment
• Easier to correct billing errors (wrong part numbers or quantities billed)
Drawbacks:
• Inventory is left in a open status
• Creates more work in process
AMAZON FEES
With either method, it is best practice to account for Amazon selling fees on the
invoice. This can be done using a fee option within your DMS or as a generic part
number billed on the invoice (zero cost, fee amount as sale amount billed to the
negative). Billing the fees on the parts invoice allows for an accurate
representation of your profitability selling on Amazon, something that must be
tracked and managed.
