Handling Amazon settlement fees and charges

Amazon generates settlement reports for its sellers, providing detailed information of a seller's account activity for the settlement period. This includes a breakdown of item prices, Amazon commission fees, shipping fees, and total seller earnings. Amazon will deposit the sales money, minus charges for Amazon fees, in the seller’s Amazon account directly into the seller’s bank account approximately every two weeks.

You can process the settlement fees manually or allow Cin7 Core to do this for you automatically. This article will show you how to enable automatic capturing and processing of settlement report data for faster reconciliation with your accounting records.

Cin7 Core uses the settlement report data to:

Create a money received task for the settlement deposit paid from the Amazon seller account (specified accrual account) to the seller's bank account,
Create expenses related to sales (such as commissions and FBA fulfillment fees) as additional COGS/journal lines on the associated sale order.
Create fees not associated with a specific sale as manual journals.
Notify the master user of the account if the settlement report contains an unmapped transaction type in Cin7 Core.

Prerequisites

Set up Chart of accounts and Bank accounts.
Set up Amazon integration.
- Select a default Customer for the Amazon store (Integration → Amazon → [select store] → Setup → General Settings).
- Map Amazon tax rules to Cin7 Core tax rules.
- Map Amazon payment methods to Cin7 Core payment accounts.
  - Xero: Map Amazon payment methods to accrual accounts, not bank accounts. Xero does not allow manual journals to be posted against bank accounts. Fees are recorded as DR expense accounts and CR accrual accounts. This is then moved as a DR accrual account, CR Bank account.
- Define a Money settlement bank account.

Enable automatic processing of Amazon settlement reports

You will need to enable the Process Amazon settlements report setting for Cin7 Core to automatically capture and process data from the settlement report. When enabled, Cin7 Core checks for settlement reports to load and process automatically every hour.

Go to Integration → Amazon → [select store] → Setup → Account and cash settings and enable Process Amazon Settlements Report.

You will need to download and reconcile the settlement report manually if this setting is disabled.

Define money settlement bank account

Select the bank account that is used to receive settlements from Amazon in your Amazon settings in Cin7 Core. Amazon will deposit money in this bank account with a money received task, or a money sent task if the settlement deposit is negative. This must be a bank account that can receive payments.

Bank account currency and Amazon settlement currency must be the same.

Map accounts and tax rules in Cin7 Core to Amazon transaction types

You will need to map Amazon transaction fees to the appropriate expense accounts from your Cin7 Core Chart of Accounts to process the settlements report automatically. Cin7 Core uses this mapping to add charges, fees, and payments against sale orders and to generate manual journals so financial data is accurate across your platforms.

Expenses related to tasks (such as commissions and FBA fulfillment fees) are created as additional COGS/journal lines in sales. Fees not related to sales are created as manual journals.

Cin7 Core creates internal notifications and notifies the account master user via email in the event of unmapped transactions, e.g. Amazon introducing a new fee.

Go to Integration → Amazon → [select store] → Setup → Link accounts in Cin7 Core to Amazon transaction fees.
Click Load from Amazon to load all fee types.
Map fee types to an expense account from the chart of accounts. The Default lines tax will be auto-filled with a tax rule but you can edit this here.
- Use Skip mapping for transaction types Cin7 Core should ignore. For example, Current reserve amount does not need to be mapped against a Core account as it is not a charge or a fee, but your merchant reserve money that Amazon accumulates periodically. Cin7 Core will still capture skipped transactions and sync them to Xero when Consolidation by settlement file is enabled.

Load and review Amazon settlement files

Cin7 Core checks daily whether an Amazon settlement file is available and will load it automatically. Generally, you do not need to trigger manual load of settlement data, however, if a file was not captured by Cin7 Core or to load historical settlement data, you can use Load settlement data to load the file manually.

Go to Integration → Amazon → [select store].
Select Amazon Settlement files to view downloaded files. If you have Process Amazon settlements report automatically enabled, Core will process settlement files automatically and update your accounting records with the relevant transactions. If the setting is disabled, you will have to trigger manual processing of settlement file.
Review the details of each transaction in a settlements file by clicking Review to open a pop up window. Export exports the settlement file data in .csv format.
From here, you can search individual transactions and edit the account and tax rules of transactions if necessary.
- If your organization is integrated with Xero and has enabled Consolidate by Amazon settlement, click Confirm sync with Xero to send settlement details (including COGS) to Xero during the next manual or automatic sync. This creates a sync entry (data will send next time sync is performed), and does not sync the data itself.

Review Amazon settlement period COGs

Cin7 Core stores COGs data for the settlement period with the settlement file. Costs for the period are calculated using product cost data from Core.

Go to Integration → Amazon → [select store].
Select Amazon Settlement files to view downloaded files.
Review the details of each transaction in a settlements file by clicking Review to open a pop up window. This page also has a section showing the average COGs of products sold.
You can update average costs and re-calculate the cost of goods sold prior to confirming sync of settlement details to Xero. All other fields are read-only. Average cost cannot be changed after the data has synced to Xero.

Consolidate sales by settlement file (Xero only)

Cin7 Core allows consolidating all sales from the same channel and store when exporting sale details to Xero.

Use Xero synchronization mode in your Amazon Setup settings to control how sales are synced to Xero.

Select Sync as individual sales to sync sales to Xero as individual sales if No consolidation is selected, or as one consolidated sale per day if Daily consolidation is selected.
Select Consolidate by Amazon settlement to export a single settlement file invoice (if settlement deposit amount is positive) or bill (if settlement deposit amount is negative). This will take priority over any other consolidation settings active in Xero or Amazon settings in Cin7 Core. When you enable this setting, you can then optionally group transactions by All sales, By product, or By product categories.

The first time you enable this setting can cause duplicate data entries. Cin7 Core adds a one time adjustment upon initial sync for settlements which contains transactions that have already been synced when in No consolidation mode. Cin7 Core cannot do this adjustment in Daily consolidation mode as individual sync items are not available to verify duplicates.

Settlement report transactions must belong to a single month. When the settlement report covers dates in two months, the report will be split into two.

Settlement will not download automatically

If you are having trouble downloading specific settlements from Amazon to Core, you can try to download the settlement directly from Amazon.

Once you have manually downloaded the settlement, it will be available in the Amazon API for Cin7 Core to capture. Next, you can manually load the settlement data in Core to capture the settlement you need.

Amazon settlements more than 3 months old are no longer available via the Amazon API. Manually loading the settlement from Amazon makes it available via API again and allows Cin7 Core to capture it.