5 ways Amazon sellers can get more from Amazon

There are several ways Amazon sellers can get more of their money back from Amazon.

Many sellers don’t look into the details of their Amazon business. So long as they get a large payment every settlement, they trust that their accounts are in order.

But that’s not always the case. In fact, many sellers are likely owed hundreds, if not thousands, of dollars in reimbursements for damages or mistakes.

These mistakes can include lost or damaged items at an FBA warehouse or some mistaken charge on a refund.

We’ll go over other areas sellers can look into to reclaim or get the money they are owed back from Amazon.

Business Orders

If you sell B2B on Amazon Business, then chances are you haven’t changed the default payment option.

While not a reimbursement, business order payments can help with cash flow.

It’s common for businesses to have Net 30 terms on Amazon, and some may even have Net 90 terms. While you can get more money through sales to businesses, you won’t receive the proceeds from some sales for at least 30 days. This can seriously restrict cash flow for many sellers.

The default payment option for business orders is that the latest you can be paid is 7 days after the invoice due date. That can mean up to 97 days before sellers are finally paid by businesses with Net 90 terms.

Instead, you can change your business payment setting so that you’re paid immediately after the order is shipped. It’ll cost you an additional 1.5% transaction fee.

View the linked article above for step-by-step instructions on changing your payment options for business orders.

If you need the cash flow, then an additional 1.5% fee isn’t much considering 90 days is enough time for one inventory turnover.

Fraudulent Returns

If you’re not filing SAFE-T claims for reimbursements on fraudulent returns, then you’re losing money on refund fees, your cost of the product, and possibly shipping expenses, not to mention the labor involved.

Many sellers avoid filing reimbursement claims because they feel like they won’t receive the reimbursement, or they don’t know that they can request a reimbursement.

But filing claims to receive reimbursement for fraudulent returns has another benefit: it alerts Amazon to customers who abuse return policies. Amazon has been known to ban customers for just this reason.

Read our article here for how to associate order IDs with Amazon FBA returns.

By filing legitimate and well-researched reimbursement claims, you can help yourself, other sellers on the marketplace, and all other Amazon customers. Additional expenses like shrinkage are usually passed onto customers in the form of higher prices.

Check your refunds and returns reports to see if there are any discrepancies like refunds with no returns, and inspect your returns to see if there is any fraud.

Scammers have gone as far as swapping out the insides of electronics in order to bypass inspection.

Fulfillment Fees

Amazon sometimes gets the dimensions of products wrong. When this happens, you’ll pay more for FBA fulfillment fees.

Requirements for small standard-sized products are:

Any packaged item with its longest side 15 inches or less, its shortest side 0.75 inch or less, and its median side 12 inches or less.

It’s $2.41 for products 10 ounces or less and $2.48 for products between 10 – 16 ounces.

The next tier is large at $3.19 for products that are 10 ounces or less.

If your product exceeds those requirements by a little bit, then look into ways you can redesign your product or packaging so that they can take advantage of the lower rates.

Alternatively, confirm that you’re being charged the correct FBA fees and request reimbursements and scans for products that should belong to a lower size tier. Even a 7¢ difference adds up quickly if you’re selling thousands of items a month.

Be sure to check the product dimensions on the listings to make sure they’re correct as well.

New sellers sometimes enter the wrong dimensions when creating listings, and these dimensions can result in very high FBA fulfillment fees.

Reimbursements

There are numerous instances where you can and should request reimbursements from Amazon.

You’ll want to do the research and be prepared with all the information necessary so that you can expedite the reimbursement process.

This includes having invoices from your suppliers, pictures showing damage, shipping weights, and transaction IDs.

Look into your fulfillment reports and see if any of the cases below apply to you. If so, you can request a reimbursement from Amazon.

These are only the more common reimbursement cases and by no means is this a complete list.

  • Missing or damaged products during inbound receiving
    • If you constantly have damaged products, consider how you’re packaging your inbound shipments or product packaging
  • Customer refunded but failed to return products
    • This does not apply if you have returnless refunds enabled
  • Missing or damaged inventory at fulfillment centers
    • View your inventory reports for more detailed information
  • You were charged for the entire refund even though the customer refunded your one item on the order
    • For example, a customer ordered your product at $20 and a few other products totaling $100 and you had $100 deducted from your account instead of $20

Check out our article on Amazon reimbursement services or tools that can help. Be wary about having automatic submissions, as some sellers have been suspended for submitting too many unsupported reimbursement claims.

Be sure to research any potential reimbursement claims before you submit them.

Keep in mind that Amazon sometimes reimburses you with cash only to take back the cash when they later find the product. In these cases, you’ll see a reimbursement reversal on your settlement.

Storage Fees

In 2019, Amazon changed the way it handles its long-term storage fees (LTSF). Now you’re only charged LTSF if your product has been at fulfillment centers for more than 365 days.

Products in the small and light program still have LTSF for 181-365 days and a higher rate after 365 days.

If those products aren’t selling, then you’ll want to create removal orders to avoid higher fees.

Amazon usually has free inventory removal days every year, so you won’t have to pay the 50¢ per-item return fee.

If you’re not careful, storage fees can accumulate to a point where they far exceed the cost of the item. Sellers who sell used books may be more vulnerable to this since some books can take longer to sell.

If you take advantage of free inventory removals, there’s usually a waiting period before you can send those products back to the fulfillment centers.

The waiting period can be as long as 3 months (if you remove your inventory during the promotional period before Q4).

Whether you sell a few products a month or a few thousand products a month, reviewing your Amazon account for unusual fees and reimbursements is worthwhile.

For bigger sellers, someone who handles reverse logistics and monitors accounts for potential reimbursement cases can easily recover enough funds to make the position worthwhile.

If you like this article, read others on our articles page, or check out the links below.

Amazon to QuickBooks Online Accounting: Recording Reimbursements

Learn how to record Amazon reimbursements in your QuickBooks Online company!

Amazon has two different kinds of reimbursements: inventory and cash. Many sellers don’t really track individual reimbursements, but failure to do so can result in large inventory discrepancies. In turn, these discrepancies to lead to issues with your seller performance metrics since you may end up selling inventory you don’t have. Or you’ll end up with a lot of dead stock once you get around to auditing your inventory.

In this article, we’ll go over how to properly and accurately track Amazon reimbursements in QuickBooks Online to keep your inventory counts accurate and your business running smoothly.

Locating reimbursements on Amazon

You can find all Amazon reimbursements under Reports > Fulfillment > Reimbursements. You can also just wait until the settlement to import all of the settlement-related transactions onto one document. This way, you won’t have to create individual documents.

Amazon Reimbursements reports

You can filter Event Date by a custom date to see a list of all of your reimbursements. If you’re catching up, you can create one document that includes all of your cash reimbursements and another document that includes all of your inventory reimbursements for the period.

In fact, many sellers may just take some time every settlement to create the proper reimbursement documents since these types of transactions don’t happen on a daily basis like sales transactions. But doing this means your inventory won’t be correct until you account for these reimbursements.

If you choose to process all credits and expenses on one document, you can go to Reports > Payments. Sort by Other transactions.

Other Transactions

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Recording inventory reimbursements in cash

Sample reimbursements

You’ll see how Amazon reimburses you at the end of the row. In this particular example, we see a reimbursement for 1 quantity in cash.

To process this transaction in QuickBooks Online, you’ll want to create a Vendor Credit to credit an income account, preferably one you’ve created to track Reimbursements instead of just an Other Income account.

If you’ve been keeping accurate records of transactions thus far, then you would have created a few documents related to the initial order:

  • Invoice and payment for the initial order
  • Refund receipt for the customer refund
  • Sales receipt for $0 to record the absence of a return

So you’ve lost 1 unit of this item because the customer was refunded and never returned the item. The sales receipt accounted for this. Now we’ll need to account for the reimbursement.

When you create the Vendor Credit document for this item to credit the account (not the item), you’ll properly credit your income account. You don’t need to create any documents to adjust inventory since the sales receipt would have already documented the loss.

Vendor Credit location

Vendor Credit Filled

Once you’ve saved the Vendor Credit form, your Amazon Reimbursements account will correctly show this reimbursement. No adjustments were made your inventory accounts because you entered the reimbursement under the Accounts section.

Profit and Loss for Reimbursement

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Recording inventory reimbursements in inventory

Reimbursements Inventory

You’ll see how Amazon reimburses you at the end of the row. In this particular example, we see a reimbursement for 1 quantity in inventory for a customer who didn’t return the product.

To process this transaction in QuickBooks Online, you’ll want to create a Vendor Expense for the quantity reimbursed for $0. You don’t want to enter $22 here because doing so will make QuickBooks Online adjust your Cost for the quantity you’ve entered.

If you’ve been keeping accurate records of transactions thus far, then you would have created a few documents related to the initial order:

  • Invoice and payment for the initial order
  • Refund receipt for the customer refund
  • Sales receipt for $0 to record the absence of a return

So you’ve lost 1 unit of this item because the customer was refunded and never returned the item. Creating a Vendor Expense for an inventory reimbursement will properly adjust your inventory count and the related inventory accounts.

Vendor Expense location in QuickBooks Online

Make sure you select the right product that Amazon reimbursed.

Ensure that the amount is $0.00. Adding a value here will change your Cost for the item, and we’ve already recorded the cost of this item with the Sales Receipt for $0.

Inventory Reimbursement

Here’s an example of the report for a sale (Invoice), refund, lack of return (Sales Receipt), and reimbursement (Vendor Expense).

Profit and Loss with Vendor Expense

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Recording reimbursement reversals

Amazon will sometimes reverse their cash reimbursements when they discover your product. When this happens, you’ll need to account for the transaction since failure to do so will mean your accounts won’t balance. These reversals involve taking back the cash and returning inventory.

Reversed Reimbursement

We can record this transaction by creating a Vendor Expense document. This effectively means you’re “buying” back the product with a cost of whatever Amazon took back.

Creating the Vendor Expense document will properly increase your inventory by 1 and reduce your Undeposited Funds account by the reversal amount. Make sure you choose your Undeposited Funds account since Amazon takes the amount from your current seller balance.

Vendor Expense location in QuickBooks Online

Vendor Expense filled

To summarize, this Vendor Expense document debits or decreases your Undeposited Funds by the amount Amazon took back. It also increases your inventory count by 1.

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Recording non-order reimbursements on settlements

When it comes to non-order reimbursements or income, like Warehouse Lost, Warehouse Damage, or any other account-related reimbursements or adjustments, many sellers choose to lump these non-order reimbursements into one account, like “Amazon Other Income.”

Some sellers separate the more common reimbursements from the more rare ones, like Warehouse Lost and Warehouse Damage. Doing this will give you an idea of how much inventory was lost or damaged at Amazon versus what was actually sold. You should create specific accounts to track the type of transactions you want details about.

Create an Income > Other Primary Income account in your Chart of Accounts called “Amazon Reimbursements” or “Amazon Other Income.” When the settlement arrives and you create the proper documents, you’ll select the proper account to credit. See below for an example.

Because these inventory adjustments happen outside of sales, you’ll have to run the FBA Reimbursement report to see them all. Or just process these transactions on the day of the settlement to reconcile these transactions with your accounts and inventory.

Recording non-order reimbursements in cash

You’d use a Vendor Credit for these types of transactions where Amazon loses or damages your product. One example of such a transaction is a Lost:Warehouse item.

You’ll create documents for these transactions because they affect your accounts and inventory.

Create a Vendor Credit document. This time for the Item details section, we’ll want to document the quantity reimbursed and the amount Amazon reimbursed you for the product. By doing this, we’ll subtract one quantity from the inventory and add a credit from Amazon for the amount.

After we create the Vendor Credit document, we’ll have to create a corresponding Deposit document to move the credit from Amazon to the Undeposited Funds account.

You can then Make payment and zero out the Vendor Credit balance or just do it when you’re processing the rest of the reimbursements from the settlement.

Lost Warehouse Cash

Vendor Credit for Lost Warehouse

Once you’ve saved the Vendor Credit, we’ll have to create another deposit from Amazon (the Vendor Accounts Payable (A/P)) account to move the credit to the Undeposited Funds.

Deposit document for Vendor Credit

QuickBooks Online should track the Deposits and Vendor Credits, but you may have to click on Make payment and confirm that all the Deposits and Vendor Credits are tracked. The balance should be zero.

Overdue Vendor Credits

Vendor Credit Bill Payment

 

Recording non-order reimbursements in inventory

Much like the order reimbursements, you’d use a Vendor Expense in order to receive the reimbursement into inventory. But do this only if you’ve already created a Vendor Credit document for the initial loss.

If you haven’t documented the lost inventory, then creating a Vendor Expense will incorrectly add to your inventory quantity. You can run an Inventory Adjustments report to see lost and found inventory.

Another option instead of having to look at the inventory adjustments is just to create a Vendor Credit document and a Vendor Expense document every time you receive a reimbursement for inventory only. This way, your inventory will always be accurate.

Your inventory may still be different from Amazon’s count because of lost and damaged inventory. Don’t create documents or adjustments in your inventory until you’ve opened a case with Amazon. Once Amazon finds the inventory or reimburses you, you can then create the proper documents.

Inventory Adjustments

Sample Adjustments

Confirm that Amazon hasn’t found the unit. Then check that you haven’t already processed the reimbursement for the Lost item. In the example above, Amazon lost 2 units but only found 1. The reimbursement is for the second missing unit.

Lost Inventory Warehouse

Inventory Reimbursement

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Learn how to handle other accounting aspects for your Amazon business:

Handling FBA refunds and returns in QuickBooks Online

Handing Amazon FBA refunds and returns on QuickBooks Online may seem like a straightforward process, but it can become complicated under certain scenarios. Amazon sometimes issues refunds before customers return products. Or customers will return an item that is damaged and no longer sellable. In these situations, you’ll have to account for the product in some way.

It would be inaccurate to create a refund document in QuickBooks Online when Amazon refunds without the return since that would increase your inventory count. That’s because refund documents in QuickBooks Online increase your inventory since it assumes you’ve received the product back.

Since you’re using Amazon FBA, creating a refund receipt isn’t accurate since sometimes no inventory was returned to the fulfillment center. By creating refund receipts for all your Amazon refunds, your QuickBooks Online inventory quantity will be incorrect. If you’re fulfilling orders on several marketplaces, then the incorrect count can lead to costly delays for your business.

You’ll end up selling inventory that you don’t have. What’s worse, your employees may end up selling used and returned stock as new for those products that were returned but not thoroughly inspected. The last thing you want is negative feedback caused by canceled orders or item not as described returns.

How does SellerZen handle Amazon refunds in QuickBooks Online?

SellerZen’s automated import service creates the proper documents for all Amazon transactions, including refunds and returns. That way, you’ll always have your inventory count correct for the connected marketplace, even for cases where products are returned 60 days after refunds are issued.

For Amazon refunds, we’ll not only create the refund receipt for the returned product, but we’ll also check to see if the customer returned the order. If no returns are found, then we’ll create the proper Vendor document to adjust your inventory on hand.

We do this to offset the increase generated automatically by the refund receipt. We’ll later generate the proper documentation if the customer returns the item and it’s added back to your FBA inventory for sale. No matter what happens, we’ll always have your Amazon inventory reconciled so that you can focus on growing your business instead of reconciling Amazon FBA refunds, returns, and QuickBooks Online inventory.

How does SellerZen handle Amazon FBA refunds and returns?

SellerZen creates a sales receipt for instances where refunds are issued but no returns are found. We do this because you’ve received nothing from the sale, and the sales receipt removes one inventory. Essentially, you’ve “sold” one item for nothing. Any other amount here will result in inaccurate reporting because the product is a loss at this point until the customer returns it.  The other accounts, like your Sales of Product Income and your Cost of Goods Sold, are adjusted properly as a result of the sales receipt.

Without the sales receipt, all refunds would increase your inventory count. Over time, this can lead to a significant inventory discrepancy since not all refunded orders would be returned and in sellable condition.

If the customer later returns the product and it’s in a sellable condition, then we’ll create the right QuickBooks Online document to adjust your quantity on hand. That way, your QuickBooks Online inventory will remain synchronized with your current Amazon FBA inventory.

This kind of accurate reporting is necessary to reconcile your inventory counts on QuickBooks Online with Amazon. Of course, manually processing refunds and returns can be a tedious task since you’ll have to run return reports to see what, if any, items were returned in sellable condition. And you’ll have to do this on a fairly regular basis since customers have 30 days or longer to return an item. We’ve even seen instances where customers returned items several months after they were refunded, prompting Amazon to reverse their reimbursement.

All of these cases can prove frustrating to track on Amazon when you’re selling hundreds of items a month. By using SellerZen’s automated service, you can rest assured that all your connected marketplace transactions are precise. And the best part is that all of these order-related transactions will cost you nothing since we only count the initial order.

Keeping your QuickBooks Online company and your Amazon seller account synchronized and in harmony is not an easy task. For many small business owners, this task alone requires a bookkeeper or a well-trained data entry clerk, but even they can make mistakes. Using an automated service like SellerZen can guarantee quick, accurate documents and reduce downtime caused by human errors.