Amazon holds back a portion of your sales from each payout and releases it later. Link My Books' Deferred Transaction Adjustments feature (under Revenue Recognition in Settlement Settings) recognises those sales, refunds, fees and taxes in the month they happened, rather than the month Amazon pays you.
This article explains what deferred transactions are, what the feature creates in your accounts, and how to read the results.
To turn the feature on, see How to enable Amazon Deferred Transaction Adjustments.
What Amazon deferred transactions are
Deferred transactions are orders Amazon leaves out of the current payout and releases in a later one. Amazon defers for three reasons:
DD+7 (Delivery + 7 days): funds are held until about 7 days after delivery.
B2B: business buyers on credit terms, so Amazon holds funds for longer.
Unspecified: Amazon gives no reason. Link My Books groups these separately so they are still recognised.
This is why your Xero or QuickBooks turnover looks lower than Amazon's sales report. Amazon's reports count a sale on the order date. Link My Books posts on a settlement basis, so your accounts show what Amazon has actually released and paid. The difference is the deferred balance Amazon is holding, and it is largest around busy periods such as Q4 and January. Both figures are correct; they measure different things. Nothing is wrong with your data.
Amazon introduced deferred transactions in place of its old reserved balances and has moved sellers across gradually, so if you have only just noticed the gap, your account is likely one of the more recently switched.
Why it matters for your accounts
If you only book revenue when the payout lands, sales from this month can appear next month or later. That gives you:
a misstated monthly P&L, with revenue and fees in the wrong period
lumpy performance driven by Amazon's hold timing rather than business activity
KPIs such as CAC and ROAS that no longer line up with revenue
Good revenue recognition books sales, refunds, fees and taxes in the period the activity happened, not when Amazon chooses to pay.
What Link My Books creates each month
Each month, for every Amazon marketplace, Link My Books finds the transactions Amazon deferred that month and the ones it released that month, and creates two recognition settlements per deferral type:
a Deferred settlement, for items deferred in the month
a Released settlement, for items Amazon released in the month
They look like normal settlements, with the usual Sales / Refunds / Fees / Taxes lines, but their net balance posts to the Amazon Deferred Balances account you chose (we recommend LMB9d: Amazon Deferred Balances, set up as an Other Current Asset).
You will see references like these in your settlements list:
Deferral type | Deferred settlement | Released settlement |
DD+7 |
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|
B2B |
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|
Unspecified |
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|
Together they do three things:
Month of activity: the Deferred settlement puts sales, refunds, fees and taxes on your P&L in the month they occurred.
Month of release: the Released settlement reverses them when Amazon pays, so nothing is double-counted in the payout month.
Balance sheet control: Amazon Deferred Balances rises when items are deferred and falls when they are released, mirroring Amazon's holds.
If you have Cost of Goods Sold tracking enabled, Link My Books also creates COGS bills for these settlements. Your normal Amazon settlements and payout reconciliation are unaffected.
Worked example
In January, Amazon defers £12,000 of DD+7 sales, with £1,800 of associated fees. In February it releases £4,000 of those sales.
January: the Deferred (DD+7) settlement posts January's sales, refunds, fees and taxes to the P&L. The net increases Amazon Deferred Balances by the amount Amazon is holding.
February: the Released (DD+7) settlement reverses the recognition for the £4,000 Amazon has paid, so February's P&L is not double-counted when the cash arrives in the normal settlement. The net reduces Amazon Deferred Balances.
Result: the P&L shows January activity, including January's fees, in January. The balance sheet tracks the temporary hold and clears it as Amazon releases. The same flow applies to B2B and Unspecified settlements.
When recognition settlements are created
Recognition settlements are created once Amazon's settlement covering the month end has arrived for every marketplace you sell on. Amazon settlements often span the month end (for example 28 September to 12 October), so this is usually within the first week of the following month and never later than the 15th. The exact day varies with Amazon's settlement schedule.
They are final when created and are not revised later. If you close your books early, check the settlements list for that month's Deferred and Released entries before you close; in most months they will be there within the first week.
Reading your reports
Turnover vs Amazon's sales report
With the feature on, your Xero or QuickBooks turnover moves much closer to Amazon's order-date figure, because deferred sales are recognised in the month they happened. Any remaining gap is normal timing, explained under What Amazon deferred transactions are above.
Why your fee accounts move
Accountants often ask why P&L expense accounts such as FBA fees, MCF Pick and Pack or Amazon Storage Fees show large movements from Deferred and Released settlements when the main settlements barely touch them. This is expected. Recognition settlements recreate the full settlement breakdown, fees included, so that expenses land in the right period too, not just revenue.
In a month where deferrals and releases are unequal you will see a net movement in those fee accounts. It evens out as Amazon releases the deferred orders in later months.
Why Amazon Deferred Balances never clears to zero
New orders are deferred every month while older ones are released, so the account is a rolling working balance. It rises in months where deferrals exceed releases, falls when releases exceed deferrals, and over time hovers around what Amazon is holding.
Recognition settlements record monthly movement, not the total Amazon holds, so the account only tracks Amazon's actual balance if you set an opening balance when you enable the feature. See Setting an opening balance in the setup article.
Checking it's working
Feature enabled: Settings → Settlement Settings → Revenue Recognition shows Deferred Transaction Adjustments as active, with a start date. If not: follow the setup article.
Balancing account selected: an Amazon Deferred Balances account is chosen. If not: select one on the same screen.
Settlements visible: for a month after your start date, the settlements list shows Deferred and Released entries per marketplace. If not: confirm that month actually had deferred or released items, and allow until the 15th of the following month. A backfill covering many months can take 24 hours or more.
P&L check: in a month you know Amazon deferred orders, sales and fees appear in that month via the Deferred settlement, not only in the payout month.
Balance sheet check: Amazon Deferred Balances shows a rolling balance that rises with deferrals and falls with releases. If it differs slightly from Amazon: review by marketplace and by DD+7 / B2B / Unspecified. Document dates, currency rates and Amazon's reporting windows cause small variances.
✅ All five pass? Your setup is correct and the settlements will continue automatically each month.
⚠️ Something doesn't match? Contact support and say which step failed so we can go straight to it.
FAQ
Does this change my deposit reconciliation?
No. Your actual payouts still reconcile to your bank or clearing account as usual. Recognition settlements route their net movements through Amazon Deferred Balances, not your bank.
Which account type should Amazon Deferred Balances be?
We recommend Other Current Asset, since it represents amounts Amazon owes you but has not yet released. Follow your accountant's guidance if they prefer another treatment.
I sell on several marketplaces or in several currencies.
Link My Books creates separate recognition settlements per marketplace and per deferral type. Currency conversion follows your accounting platform's standard treatment on the document date.
Will backfilling earlier months change VAT returns I have already filed?
It can. Recognition settlements are dated to the month the activity happened, not the day you post them, so posting a backlog into a filed VAT period changes that period's VAT figures in Xero or QuickBooks. Agree with your accountant how the difference will be handled before you backfill into filed periods.
How do I reconcile the VAT on Amazon fees now?
With deferred transactions enabled, fee amounts in settlements may not match Amazon's monthly VAT invoices because of timing differences. If you need the VAT on fees to be exact for your return there is a specific approach, but it has to be followed in full, so it has its own article: Reconciling VAT on Amazon fees when deferred transactions are enabled.
Can I change the start date or turn the feature off myself?
Not from the dashboard once it is active. Contact support and we will do it for you.