This is the simplest scenario for reconciling: Amazon generates one settlement that covers the period from the 13th of May to the 27th of May.

A2X fetches the settlement and either you manually send the settlement from A2X to Xero or A2X can automatically post it directly to Xero (Go to A2X Settings > Automation > Enable Payouts auto-posting).

The invoice will be sent as a ‘Draft’ Invoice to Xero Sales.

Go to ‘Business’ and Select ‘Sales overview’.

You will be taken to the following page:

Go to ‘Draft’ tab:

As you will see above, INV-0257 has been generated and the amount matches the settlement amount in A2X.

If you are happy with how the invoice came through, you can then Approve it in Xero and it will be ready to reconcile:

When you go to reconcile your bank feed, you should see the deposit from Amazon, and Xero auto-suggesting a match to the Invoice you just approved. Click “OK” to reconcile.

Your next settlement has now been generated by Amazon and the period covers the 29th of April to the 1st of May with a total settlement value of $46,787.37.

A2X will split your settlement of $46,787.37 into two invoices. You will have one invoice with an amount of $4,041.97 in April and another invoice with an amount of $42,745.40 in May. This is because the settlement period actually covers two different periods (months).

A2X splits the settlement to ensure your sales and fees are accounted for in the correct month.

Carried forward balance

Depending on your A2X settings, your invoices may include a Carried Forward Balance line. A Carried Forward Balance acts as an offset, meaning the first invoice will be a $0.00 invoice because it includes a Carried Forward Balance line that will debit the Carried Forward Balance account. See this example:

This first invoice will go through to Xero as approved.

The second invoice will then include the Carried Forward Balance line that will credit the Carried Forward Balance account. The total of the second invoice will match the amount you've been paid, allowing you to reconcile the deposit from Amazon to this single invoice.

If the two invoices are sent to Xero at the same time, the debit and credit of the Carried Forward Balance will happen simultaneously, so the balance of the Carried Forward Balance account should remain at $0.00. This can be done using the Single Settlement Reconciliation method explained above.

Draft invoices in Xero

If you don't have Carried Forward Balances in your invoices, then when you send your invoices to Xero, you will have two draft invoices dated accordingly ready to be approved:

Review them and approve. When you reconcile your bank feed, click 'Match' in Xero and select both invoices to match the total deposit from Amazon.

We know that if the settlement covers more than one month, A2X splits the settlement and creates two invoices, one for each month the settlement covers. In general, those invoices will be receivable invoices (i.e Amazon will pay you money).

What happens when the fees and costs are higher than the revenue in one of the settlements?

Negative Settlements will be posted as Draft Bills in Xero. Go to Business > Purchases overview > and then Draft to find the negative settlement. Check over the account coding and approve.

When the Amazon deposit comes through the bank feed, it will be less than the invoice waiting to be matched so it needs to be reconciled to both the invoice and the bill you just approved. This is illustrated below.

In the reconcile screen in Xero, you will see the deposit from Amazon in your bank account pending reconciliation.

Click on the little ‘Find & Match’ link in the top right corner to show the full find & match screen.

Tick the checkbox "Show Spent Items" in the match screen so that both invoices and bills will appear and can be selected for reconciling (as shown below):

Select both the invoice and the bill for the settlement, so that the total combined will balance the settlement deposit and Xero will allow you to accept it as reconciled.

The steps described above allow you to match the payment from Amazon to both the payable and receivable invoices so that it overall balances to the deposit total paid into your bank account.
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If you sell in multiple marketplaces with different currencies in Amazon you will have noticed that settlements are always in the currency of the marketplace (e.g GBP in the UK, EUR in Germany, CAD in Canada). Amazon has a currency conversion feature that you can enable, where Amazon will convert the settlement from the marketplace currency to your preferred currency right before they pay it out to you.

This means by default Xero will not recognize that the $29.50 payment from Amazon.ca is actually for the invoice of CA$37.29.

When you expand the match panel in the Xero reconcile screen, you can un-select the tickbox to have it show all currency invoices. Select the Amazon.ca invoice and Xero will automatically detect the exchange rate Amazon has applied and detect if the rate varies too much from the market rate. If the rate is acceptable, then it will consider it a match and allow you to reconcile it. Xero will calculate the exchange rate and any gains or losses resulting from the exchange rate automatically.

Please Note: You need to have a Premium Xero account to enable multi-currency.

We hope this clarifies how to approach these four scenarios on where settlements go in Xero.

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