Automate your Amazon Accounting with A2X
This month we will be discussing the A2X tool. A system that you can use to automatically extract transactions from Amazon and transfer it to your accounts.
What transactions are we talking about?
Let’s start with an example. Imagine selling a new product on Amazon: microfiber towels. Because it’s a new and yet unknown product, we’re going to promote it first. Let’s say we offer a deal where the customer gets 20% off when buying 3 towels.
If we sell 3 towels at a time, this means that 20% of the retail price will be deducted and Amazon will retain that on the amount we receive. For a single purchase, this does not apply, which means we already have to keep several amounts in our accounts.
Now we want to get our product at the top of the search results if someone searches for ‘microfiber towel’. You can do this through Amazon by using Pay per Click (PPC). Every time a customer clicks on your product, it costs you, say, 1 pound. The customer clicked, is excited about your product and wants to buy it. BAM, a sale! Money coming in.
Because you’re using Amazon FBA, the product will be shipped to your customer. In addition, Amazon also requires seller fees for every product sold. Both amounts depend on the size of your product and the country of your customer. If you sell from the UK and your customer lives in Sweden, these costs are slightly higher.
Suppose our Swedish customer receives the towels and then finds out that he doesn’t find microfiber comfortable at all. The customer returns the product to Amazon and receives a refund – an amount that Amazon retains on our financial benefit.
For our Amazon warehouse, we also pay a small amount of storage fees monthly. Finally, we must remember that we have to pay tax for each of these revenues and expenses. Amazon also calculates this amount immediately. Note: this works differently with ICP deliveries and services in the EU-zone.
Dozens of transcations per day
Please realize that the above example only applies to 1 order! Dozens of different orders are soon coming in every day, that you need to get into your accounts. Please note that Amazon in Seller Central only presents you invoices for PPC campaigns, Seller Fees, and FBA fees. Plus, Amazon only pays you the difference between your earnings and expenses on a monthly basis. What the payment is based on, you need to find out for yourself in Seller Central. What would it be like if we don’t have to figure this out ourselves and it automatically ends up in our accounts?
The Solution: A2X Accounting
When we found out A2X existed, we were somewhat skeptical. We had spent a lot of hours each quarter to find out what costs we incurred through Amazon and how account for it. That’s why we wondered if A2X really gets all the correct information from Amazon. What’s more, we were afraid that you would have to look up all the sums yourself after all. That’s why it’s good to understand what A2X is doing exactly.
How does A2X work?
To begin with, in A2X, you specify the type of Amazon fees on which item to enter in your accounts and how much VAT you need to pay on it. For example, you indicate that FBA fees should be included in the postal shipping costs and that this will always be charged 21% VAT.
Next, follow the A2X explanation to set up the API (connection to Amazon).
A2X will now automatically extract all your earnings and expenses from Seller Central and forward it to A2X via the API. A2X sets different settlements (see screenshot 1). These are the amounts that are also transferred to your account. The difference is that A2X shows exactly what income and expenses are related to that benefit (see screenshot 2).
Photo 3: Breakdown of a A2X settlement automatically transferred to accounts (Xero).
Instantly to your accounts
You can also set up an API using Xero or QuickBooks (Accounting Systems) to get the settlements directly into your accounts. Photo 3 shows how the accounts still contain total benefits. Clicking it shows that all income and expenses are included in it. And that the right VAT rates have been applied!
In short, with A2X, you can make sure you have no bookkeeping troubles and are VAT compliant as well. We are a big fan of the system and definitely recommend it. Since we’ve been working with A2X for a bit longer, we have been able to arrange a special discount code for our readers. This gives you 10% off your monthly A2X subscription fee for the first six months!
A2X Coupon code: MOD_A2X21_10
Find here how to redeem the code: How to A2X Coupon Codes