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: