An introduction to using Amazon with FreeAgent
This article is a quick guide to help you get started with the FreeAgent-Amazon integration once you’ve connected your Amazon seller account to FreeAgent.
How does the Amazon integration work?
Once you’ve set up the Amazon integration, a dummy Amazon bank account will automatically be created in the Banking area of your FreeAgent account.
Make sure that the bank account that Amazon pays your disbursements into has been added to FreeAgent (if it’s not your main business bank account) and has a bank feed enabled (if available). Amazon disbursements will automatically be imported into FreeAgent, so to get the most out of the integration, we’d recommend that you make sure that Guess is enabled in your actual bank account.
FreeAgent will start an automatic data sync and import the sales data from your last completed settlement report. Please note that any sales data prior to this will not be imported.
If you’ve not yet received a settlement report, because they’re yet to be disbursed by Amazon for example, then FreeAgent’s initial automatic sync will wait until the first settlement report is available.
After the initial sync, FreeAgent will import your sales, refunds and fees on a daily basis and categorise them automatically, including any VAT if applicable. If FreeAgent receives a transaction from Amazon that doesn’t contain a description of what the transaction relates to, it’ll be added to your Amazon bank account in FreeAgent for you to explain.
Find out more about how the Amazon integration works.
Sales from your Amazon seller account
Each day, an invoice will be automatically created in FreeAgent with the total sales values (principal and shipping) and any compensation payments, populated as line items. If you’ve received more than 20 orders in a single day, these may be split over multiple invoices created on the same day.
The aggregate value of orders within each invoice will also be added to the Amazon bank account and a bank transaction will automatically be created and explained as an Invoice Receipt against the invoice(s).
If you’ve sold items on additional marketplaces, you’ll need to upload or manually enter any transactions for non-UK sales, into your main bank account in FreeAgent. Don’t record these sales in the Amazon bank account in FreeAgent as this could cause reconciliation issues.
Refunds from your Amazon seller account
If you receive a sales refund, a credit note will be automatically created in FreeAgent with the total refunded sales values populated as line items. If you’ve received more than 20 refunds in a single day, these may be split over multiple credit notes created on the same day.
The aggregate value of refunds within each credit note will also be added to the Amazon bank account and a bank transaction will automatically be created and explained as a Credit Note Refund against the credit note(s).
If you’ve refunded items on additional marketplaces, you’ll need to upload or manually enter any transactions for non-UK refunds, into your main bank account in FreeAgent. Don’t record these refunds in the Amazon bank account in FreeAgent as this could cause reconciliation issues.
Amazon fees
Each day, a bill will be automatically created in FreeAgent for the total amount of fees on the day they are charged by Amazon. If you’ve incurred a lot of fees, they may be split into multiple bills created on the same day.
The aggregate value of fees within each bill will also be added to the Amazon bank account and a bank transaction will automatically be created and explained as a Bill Payment against the bill(s).
If you’ve incurred any fees from Amazon for storing products in warehouses outside of the UK, you’ll need to upload or manually enter these transactions for non-UK fees, into your main bank account in FreeAgent. Don’t record these fees in the Amazon bank account in FreeAgent as this could cause reconciliation issues.
Amazon disbursements
When a settlement report is due or requested, the amount of your Amazon sales after Amazon’s fees have been deducted will be automatically disbursed (transferred) to your bank account.
The Amazon bank account in FreeAgent will contain the running balance of funds held by Amazon and when a new settlement report is available, the disbursed amounts will be automatically imported into FreeAgent. These transactions will be automatically explained as a transfer to your main bank account for you to approve as detailed below.
Please note that since these disbursement transactions are automatically imported into FreeAgent, you don’t need to manually enter them within your Amazon account. If you do this, the transactions will be double counted which may cause reconciliation errors.
What do I need to do in FreeAgent?
If you have Guess enabled for both bank accounts in FreeAgent, when the disbursements are imported into FreeAgent, these bank transactions will be automatically explained as a transfer to your main bank account once the Amazon payment is displayed in your business bank account. These will be marked 'For approval' in both the Amazon and main bank accounts in FreeAgent for you to approve.
If you don’t have Guess enabled or the bank account that Amazon transfers the money into has been marked as a personal bank account in FreeAgent, you’ll need to manually explain the disbursements as transfers between accounts.
Unexplained amounts
If FreeAgent receives a transaction from Amazon that doesn’t contain a description of what the transaction relates to, FreeAgent will be unable to automatically add the transaction to the relevant invoice, credit note or bill.
Therefore, the transaction will be imported into the Amazon bank account in FreeAgent as unexplained with the label ‘Unexplained Amount’ followed by the transaction name that is provided by Amazon. You’ll need to explain the transaction, which you’ll be able to find on your Amazon settlement report, to the relevant category. If you’re unsure which category to explain the transaction to, please ask your accountant.
Useful definitions
Definitions of key terms associated with the Amazon integration are provided below.
| Term | Definition |
| Amazon adjustment fees | These are the charges that Amazon sellers can apply when a customer refunds an item. |
| Compensation payment | When goods are lost or damaged in an Amazon warehouse when using Fulfilment by Amazon (FBA), Amazon provides a compensation payment to reimburse you. |
| Disbursement | A disbursement is the transfer of funds from your Amazon account to your main bank account once they have cleared Amazon’s reserve period. |
| Fulfilment by Amazon (FBA) | Fulfilment by Amazon (FBA) means Amazon handles the storing, packing, shipping and delivering of products to customers. |
| Fulfilment by Merchant (FBM) | Fulfilment by Merchant (FBM) means the merchant (you) are responsible for the storing, packing, shipping and delivering of products to customers. |
| Fulfilment fee | The fulfilment fee is the cost per unit of picking and packing your orders, shipping and handling, customer service, and product returns. The costs are based on the weights and dimensions of your product and will be included as a line item on your Amazon bills. |
| Marketplace facilitator | A marketplace facilitator is a marketplace that contracts with third-party sellers to promote their sale of physical property, digital goods and services through the marketplace. Amazon is deemed to be a marketplace facilitator for third-party sales facilitated through Amazon's global marketplaces. |
| Marketplace tax collection | As the marketplace facilitator, Amazon will now be responsible to calculate, collect, remit, and refund sales tax on sales sold by third-party sellers for transactions destined to countries where marketplace facilitator and/or marketplace collection legislation is enacted. |
| Principal value | The principal is the price that the customer pays for your product before shipping and taxes. This value will be included as a line item on your Amazon invoices. |
| Referral fee | The referral fee is a fee Amazon charges you every time you sell a product. The percentage varies based on the product category and will be included as a line item on your Amazon bills. |
| Reserve balance | The Amazon reserve balance is the amount of money Amazon sets aside to cover any claims or chargebacks. It occurs when Amazon holds back all or part of your payment. |
| Selling fees | Selling fees are fees charged per item sold, and they include referral fees and variable closing fees (which apply only to media categories). |
| Selling plan fees | Selling plan fees are the fees you pay for your selling plan, which vary depending on the plan you select. |
| Settlement report | A settlement report is a detailed breakdown of your Amazon account activity for a given settlement period. |
| Shipping fees | Shipping fees are the shipping rates that Amazon applies when you fulfil orders yourself. |
| Storage fees | Storage fees are the fees charged by Amazon for storing your products when using fulfilment by Amazon (FBA). |
Useful information about the Amazon integration
Please note that:
- The integration won’t be available if you have an unincorporated landlord account.
- If you subscribed to FreeAgent via the Apple App Store, you’ll need to switch to a FreeAgent subscription to access the integration.
- If you bank with Mettle, you’ll need to have a new Mettle bank account in order to set up an Amazon seller account, as the sort codes for Mettle’s older e-money accounts are not recognised by Amazon. If you still use a Mettle e-money account, you can easily make the switch from within the Mettle app.
- The integration is only suitable for Amazon sellers who are based in the UK and pay UK tax. If you have an Amazon affiliates account, the integration won’t be suitable at this time.
- If you also sell on additional marketplaces, you’ll need to upload or manually enter any transactions relating to non-UK sales or fees, into your main bank account in FreeAgent. Don’t record these transactions in the Amazon bank account in FreeAgent as this could cause reconciliation issues.
- There aren’t any restrictions on how much you can use the integration, but the practical upper limit is around 200 orders per day, based on the volume of data imported from Amazon’s API.
- You can use the integration for free as part of your FreeAgent subscription until 1st September 2024. To continue using the integration after this date, you can enable the Amazon add-on which will cost £6 per month plus VAT in addition to your FreeAgent subscription.
- The Amazon add-on will cost £6 per month plus VAT in addition to your FreeAgent subscription and payments will be taken monthly.
- If you’ve been manually recording your Amazon sales in FreeAgent, you’ll need to carefully transition to using the automatic sync to avoid duplicating data.