Cost of Goods Sold (COGS) tracking is a feature in Link My Books that lets you track the cost of the units sold during each settlement period. This helps ensure that your financial reports in Xero or QuickBooks accurately reflect inventory costs as products are sold.
In This Guide:
How the COGS Feature Works
Once enabled, Link My Books will automatically calculate the total value of products sold in each payout by using the landed product costs you've entered on the Product Costs page.
Please visit these help articles for further options on how to add your Product Costs;
Here's how it works:
For each payout, we generate a list of SKUs sold.
We calculate the total cost of those items using your entered unit costs.
We then create a COGS bill that moves the inventory value from your Inventory Asset account to your COGS (Direct Costs) account.
In Xero that would look something like this:
Let's break down the lines of the above bill for clarity.
Line 1 - "Inventory Deduction From Fulfilment by Amazon (FBA)" is the COGS figure being deducted from an asset account, in this case, "Amazon Inventory".
Line 2 - "Cost of Goods Sold Fulfilment by Amazon (FBA)" is the COGS figure being added to a direct costs account, in this case, "Amazon Cost Of Goods Sold".
The bill will always balance to zero. We are simply moving value between accounts to reflect inventory movement as cost.
COGS Tracking for Specific Scenarios
1. Physically Sold Units
Link My Books tracks COGS automatically for units that are physically sold. For inventory events such as lost, reimbursed, or disposed of inventory at Amazon FBA, you will need to perform manual balance sheet adjustments based on inventory valuation. You can review your month-end inventory values on the "Inventory Values" page to aid this process.
2. Refunds and Returnless Refunds
When a refund is issued, Link My Books posts the refund transaction and any fee reversals but does not reverse the original COGS entry (e.g., returnless refunds in Amazon FBA). This is because the platform does not confirm whether the item was returned to inventory. COGS remains intact for refunds where items are not returned.
3. Replacement Orders
For replacements processed by Amazon as new orders, Link My Books captures COGS for both the initial shipment and the replacement. However, this depends on whether the replacement appears as a new order in Amazon payouts.
4. Sample Shipping Fees
If a payout includes a sample order where the customer covers shipping fees, you can check payout details to verify whether COGS were applied. Such data provides insight into shipping and sample-related revenue.
How to Set Up and Turn On COGS
Step 1: Enter Your Product Costs
Go to the Product Costs page in Link My Books. You can enter product costs directly into the table;
or use the bulk upload option for faster entry;
What to Include in Landed Cost:
This depends on how you account for inventory in your bookkeeping software:
Option A: You include all landed costs in your inventory asset account
Include:
Supplier product cost
Shipping to FBA or your warehouse
Import duty
Example:
Product cost: £5.50
Shipping: £0.18
Import duty: £0.40
Total landed cost to enter: £6.08
Option B: You only include supplier cost in your inventory asset account
Only enter the product cost from the supplier.
In this case: £5.50
📝 Tip: Match your Link My Books product cost values to your accounting method in Xero or QuickBooks.
Step 2: Turn On COGS & Select Accounts
Head to the Settlement Settings page and toggle on COGS. You'll then be prompted to:
Select your Inventory (credit) account – where product costs are deducted from
Select your COGS (debit) account – where costs are added as items are sold
If you don't have these accounts set up yet, Link My Books can create default accounts for you.
🛒 Amazon Users: You'll set different accounts for each fulfilment type (FBA, FBM, Non-Amazon Orders).
🛍️ eBay, Shopify, and Etsy Users: You'll only need to set one inventory and one COGS account.
You can also choose which COGS sources to include (e.g. exclude Non-Amazon orders if needed);
Once set up, settlements not yet sent will be refreshed automatically. For those already sent, you'll need to roll back and resend to apply COGS;
Cost of Goods Sold in Analytics Only
For users who wish to keep their Cost of Goods Sold (COGS) data separate from their primary accounting software, we offer an "Analytics Only COGS" option.
When this setting is enabled, all your COGS details will be visible and accessible within the dedicated analytics section of our application. Either within the settlement details;
Or directly within the Analytics tab;
This allows you to gain valuable insights into your product profitability and cost management directly within our platform.
Crucially, selecting this option means that your COGS data will not be posted to Xero or QuickBooks alongside your other settlement information. This provides flexibility for businesses that prefer to manage COGS internally or through other means, while still benefiting from the analytical capabilities of our system.
Once changes are made, all settlements that haven't been sent will automatically be refreshed. Any settlements that have been sent will need to be rolled back and resent with the new adjusted COGS details.
👉Tip: For eBay, Shopify & Etsy accounts you will only need to set one credit and debit account:
Once you complete the 2 steps above we will refresh all of your settlements (excluding ones that have already been sent to Xero/QuickBooks) and you will see a new COGS tab on the view settlement pages, as shown below:
If you expand open a COGS bill you can check that the landed cost of each product SKU is accurate and update it if needed as shown below.
If you need to change the currency of your landed costs or want to update all of your products in bulk you can do so from the Product Costs page.
Once COGS is turned on, we will from then on send both the Sales & Fees Invoice and the COGS Bill to Xero/QuickBooks when you click Send Settlement.
Sending COGS for Previously-Posted Settlements
If you enabled COGS after some settlements had already been posted to Xero or QuickBooks, those settlements won't automatically include COGS data. You have two options to add COGS for these older settlements:
Option 1: Send COGS individually
For each settlement that was posted before COGS was turned on:
Go to your Settlements page and refresh the relevant settlements first (this generates the COGS entries for these settlements).and click the Action dropdown next to the settlement.
Then from the Action dropdown next to the settlement select View to open the settlement details.
Navigate to the Cost of Goods Sold tab.
Click Send COGS to Xero (or Send COGS to QuickBooks).
Important: You do not need to roll back or resend the entire settlement to add COGS. The COGS bill can be sent separately as a standalone bill, leaving your original settlement invoice untouched in your accounting software.
Option 2: Bulk Post COGS
If you have many settlements that need COGS added, you can use the Bulk Post COGS feature to send them all at once:
Refresh the relevant settlements first (this generates the COGS entries).
Select multiple settlements using the checkboxes on your Settlements page.
Click Bulk Post COGS.
For full details on the bulk posting process, see our dedicated guide: Bulk Post COGS for Multiple Settlements.
Managing SKUs: Manual Creation, Hiding, and Date Filters
Link My Books automatically detects SKUs based on your settlement data, but we also provide extra tools to help you manage your SKUs more precisely — especially for handling inactive, future, or yet-to-be-detected SKUs.
👁️ Hiding Old or Inactive SKUs
You can hide SKUs from your active SKU list if they're no longer in use — for example, if you're no longer selling a particular product.
🔧 Manually Creating SKUs
If you want to prepare for new product launches or set rules for SKUs that haven't yet appeared in settlement data, you can enable the 'Allow SKU Creation' toggle which will allow you to set VAT rates before the first sale comes in.
Best Practices for Manual COGS Adjustments
Perform Regular Inventory Valuations: Conduct inventory valuations monthly, quarterly, or annually. Sum the value of inventory on your balance sheet, including all stock at FBA, your warehouse, in transit, or in production.
Match Inventory Values: Compare summed values to those shown on the month-end inventory values report in Link My Books. Adjust inventory and COGS entries on your balance sheet manually where discrepancies exist.
Recognise Costs Only Once: Costs like manufacturing, freight, and duties are logged to your balance sheet asset account upon purchase. Upon sale, these costs transfer to Profit & Loss as COGS, ensuring no double counting.
Troubleshooting and Ensuring Accurate COGS
Use comprehensive payout reviews to confirm if order types like replacements or samples are accounted for.
Consult with an accountant to optimise inventory valuation methodologies for manual adjustments.
COGS bill stuck at "Ready to Post"
If your COGS bill shows a status of "Ready to Post" but won't change to "Posted" when you click Send, there are a few common causes:
Missing or incomplete account mappings: Open the settlement and check for any missing account or tax rate mappings. If you see any gaps, add the required mappings or run the Accounts & Taxes Wizard to set them up automatically.
COGS account not mapped or inactive: Go to Settings > Settlement Settings and confirm that your COGS debit and credit accounts are both mapped and that these accounts exist and are active in Xero or QuickBooks. If an account has been archived or deleted in your accounting software, the COGS bill cannot be posted. Re-save your settings after confirming, then refresh the settlement.
Monthly product costs not uploaded: If you use the "Enter product costs monthly" option, the COGS bill will remain at "Ready to Post" until the costs for that settlement's month have been uploaded. Check your Product Costs page to ensure costs are entered for the relevant period.
Settlement needs refreshing: After making any changes to COGS settings, product costs, or account mappings, you may need to refresh the settlement before the COGS bill will post. Click the refresh icon on the settlement in your dashboard.
💡 Tip: If you've checked all of the above and the COGS bill still won't post, try rolling back the settlement and resending it. This forces the COGS bill to regenerate with the latest settings. See our Rollback Feature article for details.
These guidelines will help refine the accuracy and effectiveness of your COGS tracking in Link My Books.
If you have any questions about this article or feedback on how we could make it better please reach out to the support team via the blue chat icon on the bottom right of the page or via email to [email protected].