When Link My Books sends your settlements to Xero, we do so in the form of an invoice (almost always).
However, you may have noticed that we sometimes send your settlement as a bill instead of an invoice. This article will explain 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 settlement?
This can occur if your sales channels fees and advertising costs are larger than your sales amount, or if the sales channel has reserved a large balance of your payout for future disbursement and it has made the balance of the payout negative.
In this case Amazon will actually charge your card on file with the settlement amount and produce a negative total settlement report.
How do I reconcile a settlement if it has been sent to Xero as a bill?
To reconcile the bill against its corresponding charge to your card on file you will need to have the card you have on file with Amazon linked to Xero.
Then you match the payment on the card with the bill just as you would match a deposit from Amazon into your bank account against an invoice:
If you have any questions around reconciling your settlements then please get in touch with support and we'll be happy to help.
What is a cross-debt adjustment?
When you have a negative settlement on one Amazon marketplace (e.g. Amazon.de), Amazon does not always charge your card on file for the full amount. Instead, Amazon may use a positive balance from another marketplace (e.g. Amazon.co.uk) to cover part or all of the debt. This is called a cross-debt adjustment.
In this case, you will see the following lines appear in your settlement reports inside Link My Books:
On the negative marketplace settlement: A line called "Cross-debt adjustment" or "Cross-marketplace adjustment" showing a positive amount that partially or fully offsets the negative balance.
On the positive marketplace settlement: A corresponding negative line showing the same amount being deducted from that marketplace's payout to cover the debt.
What scenarios can occur?
There are three possible outcomes when you have a negative settlement:
Card charge only: Amazon charges your card on file for the full negative amount. You will see a "Successful charge" line in the following settlement and a "Repayment of negative Amazon balance" line. Reconcile the card charge as described above.
Cross-debt adjustment only: Amazon fully offsets the negative balance using funds from another marketplace. No card charge occurs. The bill in Xero will need to be adjusted so that the cross-debt amount nets the total to the correct figure (which may be zero).
Combination of both: Amazon partially offsets the negative balance via a cross-debt adjustment and charges your card for the remainder. You will see both a "Cross-debt adjustment" line and a "Successful charge" line in the following settlement.
How do I reconcile a cross-debt adjustment?
The key principle is that the cross-debt adjustment reduces the amount Amazon charges your card. To reconcile:
Open the negative settlement (bill) in Xero.
Check the following settlement in Link My Books for "Cross-debt adjustment" and/or "Successful charge" lines.
If the cross-debt adjustment fully covers the negative balance (i.e. no card charge occurred), you will need to reconcile the bill without a bank transaction. You can do this by adding a line to the bill to net the total to zero, using the Amazon Reserved Balances account, then approving the bill so it is marked as paid.
If there is a partial cross-debt adjustment plus a card charge, ensure you match the bill against the reduced card charge amount. The cross-debt portion is handled automatically through the Reserved Balances account in the corresponding settlements.
Good to know: The cross-debt adjustment on one marketplace and its corresponding entry on the other marketplace both flow through the Amazon Reserved Balances account, so they cancel each other out automatically. You only need to take action if the negative settlement bill in Xero is sitting as "awaiting payment" with no matching bank transaction.
Small balance negative settlements
Lastly, if the settlement is negative and has a total of less than around £20 $ or € then sometimes Amazon chooses to roll their balance forward into your next settlement payout. The article linked below will explain more about this:
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].