Why Amazon Payout Reconciliation Matters
Payout reconciliation is the process of matching Amazon's payment reports with your bank deposits and accounting records to ensure accuracy and catch discrepancies. For many sellers, Amazon payouts seem straightforward: money sells, Amazon deducts fees, the remainder deposits to your account. Yet reconciliation reveals complexity: reserved funds, held payments, multiple settlement lines, and timing differences between sales and actual deposits. Without proper reconciliation, you won't know if Amazon has made mistakes, if fraud is occurring, or whether your accounting records are accurate.
This comprehensive guide walks through the exact steps to reconcile Amazon payments, identify discrepancies, understand Amazon's settlement structure, and maintain clean accounting records. Whether you're reconciling for the first time or improving existing processes, these methods ensure your Amazon income is accurately tracked and verified against bank deposits.
Understanding Amazon's Settlement Structure
Before reconciling, understand how Amazon structures payments. Unlike simple "revenue minus fees" deposits, Amazon settlements are complex multi-line transactions covering:
- Product Sales: Revenue from sold items
- Referral Fees: Amazon's commission (usually 8-15%)
- Fulfillment Fees: FBA charges if using Fulfillment by Amazon
- Storage Fees: Monthly inventory storage (Jan-Sept at $0.87/cu.ft, Oct-Dec at $0.48/cu.ft)
- Returns & Refunds: Customer returns credited back to customer
- Chargebacks & Disputes: Customer disputes and charge reversals
- Taxes: Sales tax collected from customers (which you remit to authorities, not Amazon)
- Reserve Movement: Funds added to or released from account-level reserve
- Advertising Charges: Sponsored Products and other ad platform fees
- Subscription Fees: Professional Seller subscription ($40/month or category add-ons)
A single settlement might have 10+ line items, each affecting your net deposit differently. Reconciliation requires matching all these lines to your accounting records.
Complete Reconciliation Process: Step-by-Step
Step 1: Download Amazon Settlement Reports
Log into Amazon Seller Central → Reports → Payments → Settlement Report. Download the report for the period you're reconciling. Amazon provides detailed reports showing:
- Settlement Date
- Deposit Amount (net amount deposited to bank)
- Transaction Breakdown (all line items: sales, fees, returns, etc.)
- Gross Amount (total before deductions)
- All Fees Deducted
Save this report as a PDF for your records. This is your primary reconciliation document.
Step 2: Verify Bank Deposit Match
Check your bank account and locate the corresponding deposit date. The deposit amount should match Amazon's settlement "Deposit Amount" exactly. If amounts don't match:
- Check the correct settlement period (deposits sometimes arrive 1-2 days after the settlement date)
- Verify the correct Amazon account (if you have multiple)
- Look for split deposits (large settlements may deposit in multiple batches)
- Review for processing errors or delays
Record this deposit in your accounting system under a dedicated "Amazon Payout" account.
Step 3: Extract Revenue Line Items
From the Amazon Settlement Report, identify all revenue lines: "Order Revenue," "Sales," "Gross Proceeds," etc. These represent customer purchases (before fees). Total all revenue lines. This is your "Gross Revenue" for the settlement period.
Step 4: Extract and Categorize All Fees
Amazon's settlement report lists dozens of potential fee types. Extract each:
| Fee Type | Accounting Category | Example Amount | Notes |
|---|---|---|---|
| Referral Fee | Amazon Referral Fees Expense | ($1,500) | 8-15% of sale price depending on category |
| FBA Fulfillment | Amazon FBA Fees Expense | ($2,000) | Per-unit fee based on size and weight |
| Storage Fees | Amazon Storage Fees Expense | ($500) | Monthly storage charge for inventory |
| Returns/Refunds | Refunds Issued (contra-revenue) | ($300) | Customer returns and refunds |
| Chargebacks/Disputes | Chargeback Loss Expense | ($100) | Customer disputes Amazon decided against seller |
| Advertising Fees | Advertising Expense | ($800) | Sponsored Products and other ads |
| Subscription Fee | Professional Seller Subscription | ($40) | Monthly or category add-on subscription |
| Long-Term Storage | Long-Term Storage Fee Expense | ($250) | Extra charge for items stored 365+ days |
Step 5: Account for Reserve Movements
Look for "Reserve Held" or "Reserve Released" line items. Amazon may withhold part of settlement into reserve (seen as a negative line item) or release reserve funds (positive line item). These are balance sheet adjustments, not expenses:
- Reserve Held: Debit Amazon Reserve Account (asset), Credit Cash
- Reserve Released: Debit Cash, Credit Amazon Reserve Account (asset)
Track reserve separately from profit/loss.
Step 6: Match Sales to Platform Reports
Cross-reference Amazon's settlement revenue total to your order reports. Download "Transaction Report" or "Order Report" for the same period and verify:
- Number of orders matches
- Total revenue (before fees) matches settlement report
- Any discrepancies are identified and explained
Common discrepancies: cancellations, disputed orders, or timing differences between sale date and settlement date.
Step 7: Reconcile to Accounting Records
In your accounting software, create a journal entry recording the entire settlement:
Debit: Bank Account (deposit amount)
Credit: Sales Revenue (gross revenue)
Debit: Amazon Fees Expense (each fee type)
Debit/Credit: Reserve Account (if applicable)
After posting, the entry should balance. If it doesn't, review for missing line items or categorization errors.
Common Reconciliation Discrepancies
Timing Differences
Sales and settlement sometimes don't align by date. A sale on day 1 might not settle until day 14 (due to DD+7 policy and standard payout delays). When reconciling, always match by settlement date, not sale date.
Reserve Holds vs. Permanent Deductions
Misidentifying whether a deduction is a reserve hold or a permanent fee is common. Reserve holds are temporary (funds release later); fees are permanent. Check Amazon's classification carefully.
Sales Tax Confusion
Amazon collects sales tax from customers but shows it separately on settlement reports. Sales tax collected is not revenue to you—it's a liability (you owe it to authorities). Properly categorize as "Sales Tax Payable," not revenue.
Multi-Currency Issues
If selling on international Amazon sites, settlements may be in foreign currency. Properly record currency conversion and any exchange gains/losses.
Account-Level Fees
Some fees apply to your entire account rather than individual sales (subscription, long-term storage). These sometimes appear in settlement, sometimes separately. Ensure you're not double-counting fees.
Tools and Software for Reconciliation
Manual Reconciliation (Spreadsheet-Based)
Download settlement reports into Excel/Google Sheets. Create columns for each line item, manually match to bank deposits and accounting records. Free but time-consuming and error-prone.
Accounting Software Integration (QuickBooks, Xero)
Connect Amazon Seller Central to your accounting software. Many platforms automatically pull settlement data and categorize transactions. Reduces manual work but requires proper setup.
Specialized Tools (A2X, Bookkeeper, Basis365)
Third-party platforms designed specifically for ecommerce accounting. Automatically pull Amazon data, categorize all fees, reconcile to bank deposits, and provide reconciliation reports. Most accurate but requires subscription fee ($50-300/month typically).
Reconciliation Frequency and Schedule
Minimum Frequency: Reconcile monthly. Each settlement should be reconciled within 5-10 days of deposit to catch discrepancies while fresh.
Best Practice: Reconcile within 2-3 days of deposit. This allows you to contact Amazon support quickly if discrepancies are found.
Monthly Close Process: After reconciling all settlements for a month, your accounting records for Amazon sales should be complete and accurate before generating monthly financial statements.
Best Practices for Ongoing Reconciliation
Save all reports: Keep PDF copies of all Amazon settlement reports. Organize by month for easy reference and tax filing.
Flag discrepancies immediately: When you find differences between settlement reports and bank deposits, investigate same day. Contact Amazon support if needed.
Track reserve separately: Maintain a separate "Amazon Reserve" account in accounting software. Never mix reserve movements with profit/loss accounts.
Create a master reconciliation schedule: Build a spreadsheet listing all settlements by date, amount, and reconciliation status. Update monthly.
Review monthly trends: Compare settlement details month-to-month. Unusual patterns (higher fees, lower sales, unexpected charges) warrant investigation.