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.