If you are an Amazon seller seeing a bank deposit that's far smaller than your total sales can feel frustrating and scary. You could sell $10,000 of inventory in two weeks yet only $4,200 appears in your account.
Where did the rest of the money go?
The answer is inside the Amazon Settlement Report. This detailed financial document lists every dollar that comes in and goes out of your seller account. Knowing how to read the Amazon Settlement Report is essential for keeping cash flow finding true product margins and keeping accounting accurate.
Below is a guide, on how to read, analyze and reconcile the Amazon Settlement Report.
What Is an Amazon Settlement Report?
The Amazon Settlement Report is the financial statement for that two‑week period. The Amazon Settlement Report serves as an itemized receipt, for every transaction that passed through your account including sales, customer refunds, monthly subscription charges, FBA storage costs and reserve holds.
- Log into Amazon Seller Central.
- Hover over the Payments tab, in the navigation menu and select Payments.
- Click on the All Statements tab.
- Here you will see a list of settlement periods. You can view the summary directly on your screen. Click Download Flat File V2 to get a detailed spreadsheet breakdown
*The Core Payout Formula: How Amazon Calculates Your Money *
Before we look at each fee line item we will look at the master equation Amazon uses to calculate your bank deposit.
$$\text{Net Payout} = \text{Gross Sales} - \text{Selling & FBA Fees} - \text{Refunds} - \text{Account Reserves} + \text{Reimbursements & Credits}$$
If your final payout looks small compared to your sales volume it is always because one of these four deduction buckets was higher than you expected. Let us break down each section so you know where your payout went.
- Gross Revenue (Total Product Sales) Gross Revenue (Total Product Sales) means the top‑line income you earned during the two‑week settlement cycle.
Gross Revenue shows all the money Amazon collected from buyers on your behalf before Amazon takes any cut.
Gross Revenue typically includes:
Product Principal: The selling price of the item multiplied by the quantity sold.
Shipping Credits: If you merchant‑fulfill orders (FBM) and charge shipping Amazon collects that fee from the buyer. Adds it to your balance here.
Gift Wrap Credits: Any charges paid by customers who ordered gift‑wrapping services.
Promotional Rebates: If you ran a coupon Lightning Deal or promo code the discount amount is recorded as a number here to reduce the Gross Revenue.
- Amazon. Fulfillment Fees
This is usually the deduction block on your settlement report. Amazon offers a marketplace and a worldwide logistics network but they take money for every part of that process.
A. Referral Fees
This is Amazons charge for letting you sell on their website. For types of products the referral fee is, between 8% and 15% of the products total sale price (including shipping costs)
B. FBA Pick & Pack Fees
When you use Fulfillment by Amazon or FBA Amazon handles the picking of your items from their warehouse shelves. They pack your items into boxes. Send them out to customers. For this service Amazon charges a fee, for each unit. The fee depends on the weight and size of your product.
D. Professional Subscription and Advertising Costs|
Subscription Fee: The thirty nine dollars and ninety nine cents monthly fee, for maintaining a Professional Seller Account.
Amazon Advertising (PPC): If you run Sponsored Products, Sponsored Brands or Sponsored Display ads you can choose to deduct your ad charges from your account balance instead of paying with a credit card. If you do those ad charges will show up here.
Refunds and Customer Returns
Returns happen all the time in shopping. When a customer sends a product back Amazon changes your settlement statement to match the return. I know this can be confusing. Here is what you need to know.
Here is what happens on your report during a return:
Sales Reversal: Amazon takes back the amount of the product that was originally paid to you.
Referral Fee Refund: Amazon returns the referral fee commission that it took from the sale minus a small admin fee. The fee is usually 20% of the fee or up to $5.00.
FBA Return Processing Fees: For categories such as apparel, shoes and handbags Amazon charges a return processing fee. This fee covers the work of receiving, checking and putting the returned items, on the shelf.
4. The Amazon Unavailable Balance (Reserves)
When you look at your settlement summary and see an amount of money marked as "Unavailable Balance" or "Account Reserve " stay calm. Amazon has not taken your money. Amazon is simply holding it for a time.
Why does Amazon hold your money in reserve? Amazon is focused on customer satisfaction. Amazon wants to make sure that if a customer receives an item requests a return or files a dispute there is enough cash in your account to cover the cost.
Delivery Date-Based Reserve is the common reason for newer sellers. Amazon holds the funds for seven days after the estimated delivery date of an order. When that seven‑day window ends without problems the funds are released into the settlement cycle.
A-to-z Guarantee Claims and Chargebacks happen when a customer files a claim that they never received an order or that they received an incorrect item. Amazon then freezes the transaction amount until the claim is resolved.
Account Reviews or Performance Alerts occur when your account shows a spike in sales volume a drop, in performance metrics or suspicious activity. Amazon may then increase the reserve requirement while it reviews the account.
How Reserve Accounting Works
Think of the reserve as a buffer. Money withheld during Period A will be released into Period B. At the time new sales, from Period B are held back for Period C. If sales stay steady you will see reserve funds roll in continuously from earlier settlement cycles.
5. Summary Table: Reading Your Settlement Statement
To help you see where each dollar goes here is a breakdown of an Amazon Settlement Statement:
Settlement Category,Description,Impact on Your Payout
Product Sales (Principal),Gross revenue collected from customers,+ Positive (Money In)
Shipping & Gift Wrap Credits,Additional fees collected from buyers,+ Positive (Money In)
Referral Fees,Amazon's sales commission (usually 8%–15%),- Negative (Deduction)
FBA Pick & Pack Fees,Fulfillment charges for handling and shipping,- Negative (Deduction)
Storage Fees,Monthly warehouse inventory storage charges,- Negative (Deduction)
Refunds & Return Charges,Reversed sales and return handling costs,- Negative (Deduction)
PPC Advertising Costs,Sponsored ad campaign spend,- Negative (Deduction)
Unavailable Balance (Reserve),Funds temporarily held for buyer protection,- Negative (Held for next payout)
Previous Reserve Released,Funds released from the previous payout cycle,+ Positive (Money In)
Reimbursements,Amazon credits for lost or damaged inventory,+ Positive (Money In)
NET BANK DEPOSIT,The final balance transferred to your bank account,= Final Payout Amount
How to Reconcile Your Settlement Reports Like a Pro
Now that you understand what goes into a Settlement Report how do you keep this information organized in your business? Guessing can hide expenses, lower profit margins. Cause errors on tax filings.
Here are four best practices, for managing your Settlement Reports:
1. Stop Recording Bank Deposits as Revenue
A lot of sellers get this wrong. They look at their bank account see a $4,000 deposit from Amazon and away put that as "Sales Revenue" in their accounting software.
This is a mistake. That $4,000 might actually be from $10,000 in sales. $4,000 In Amazon fees $1,000 spent on ads and $1,000 held as reserves. If you just record the deposit you’re missing out on de
- Match Every Settlement Period Individually
Amazon settlements don’t follow calendar months. They run on a 14-day cycle. So one settlement might start on May 25th. End, on June 7th.
To keep your books accurate and clean you need to split the settlement file across the months. Record the part that happened in May in May and the part that happened in June in June. This way your revenue and expenses match the time they happened.
3. Track Your Real Profit Margins (Net Margin)
Do not judge your business success by top‑line sales. Always calculate Net Margin after you have added the cost of goods sold (COGS) Amazon fees, shipping costs and advertising costs.
Step-, by-Step Breakdown (Easiest for Readers to Understand)
Calculate Net Profit:
Net Profit is found by taking the Net Bank Deposit and subtracting the Product COGS and Other Overhead.
$$\text{Net Profit} = \text{Net Bank Deposit}. \Text{Product COGS}. \Text{Other Overhead}$$
- Use Automated Accounting Tools
If you handle hundreds or thousands of orders every month entering each line item by hand from files into QuickBooks or Xero can take up a lot of time. It’s slow and full of mistakes.
Think about using automated reconciliation tools like A2X or Webgains.
These tools read your Amazon files automatically. They match every fee and charge to the account, in your general ledger. When a settlement is finalized they create accurate journal entries and send them straight to your accounting software. No manual work. No more errors. Smooth consistent records every time.
Conclusion
The Amazon Settlement Report can feel overwhelming at glance. Once you learn how to read it the Amazon Settlement Report becomes one of the powerful financial tools, in your business.
The Amazon Settlement Report tells you the story of your operations. The Amazon Settlement Report shows how value your products generate, how much fulfillment costs you how much you spend on advertising and how much working capital sits in reserve.
By analyzing your settlement statements you can catch fee discrepancies early. By analyzing your settlement statements you can also reduce inventory storage costs manage your PPC ad spend and make confident decisions based on data that grow your profits.
Top comments (0)