Once you have sent a settlement to Xero you will be able to reconcile the settlement against the disbursement Amazon will have paid out to your bank account.
The good thing about settlement based Amazon accounting is that when you do so the amount shown on the invoice in Xero and the amount you receive into your bank from Amazon will be exactly the same. This makes it really easy for you (or your accountant) to reconcile your bank account.
Below are 2 steps that you will take to reconcile your Amazon settlements in Xero.
Step 1 - Approve the draft invoices in Xero
When you send a settlement to Xero from Link My Books we send it as a draft invoice.
We always recommend that you or your accountant check your invoices in Xero ensuring that the correct account and tax rates have been applied, then Approve them and move to the next step.
Step 2 - match the Amazon disbursement to the settlement invoice
Once you approve the invoice then locate the Amazon disbursement on your bank statement reconciliation in Xero and click on the OK button, as shown below:
This will work for settlements in your home currency, so if the invoice is in GBP and your bank account is in GBP too.
IMPORTANT - If the currency of the invoice is different to that of the bank account, then follow the instructions in this article on How to reconcile foreign currency settlements.
Why are some of my settlements being sent as bills instead of invoices to Xero?
When Link My Books sends your Amazon settlements to Xero we do so in the form of an invoice (almost always).
You may have noticed that we sometimes send your settlement (or part of it) as a bill instead of an invoice and wondered why we do that...
Since Xero does not allow negative total invoices, if you have a settlement which is for a negative amount then we have no choice but to send it as a bill instead.
Why would I have a negative invoice for a settlement?
There are two main reasons as to why you may have seen this happen in your Link My Books account.
You have a negative settlement. This can occur if your Amazon fees and advertising costs are larger than your sales amount. In this case Amazon will actually charge your card on file with the settlement amount and produce a negative total settlement report.
If you have a settlement that spans two months and you also have a large reserved balance by Amazon. In this case we split the settlement by month so we create two invoices but because the reserved balance will always fall in one or the other invoice it will end up meaning that one of your invoices will be for a negative total.
How do I reconcile a settlement if it consists of one invoice and one bill?
Great question! If you end up with the second situation described above then you would do the following to reconcile the invoice and the bill against a single payment into your bank from Amazon:
Step 1 - Send the settlement to Xero from Link My Books.
Step 2 - Approve both the invoice and the bill in Xero.
Step 3 - Find the incoming payment from Amazon on your bank reconciliation page.
Step 4 - Click Find & Match and then tick the checkbox to Show Spent Items
Ticking this means that you will be able to then see both invoices and bills.
Step 5 - Find the invoice and the bill and tick them both and the transaction should go green and allow you to click OK to reconcile it.
If you have any questions around reconciling your settlements then please get in touch with support and we'll be happy to help.