Adjusting for Reserve Funds
A large percentage of sellers have Amazon hold on to a percentage of their sales. This is called Reserve Funds. These funds are usually paid back when the next Settlement closes, at which point more funds are usually withheld.
Amazon Reserve Funds
ConnectBooks creates a service item called Amazon Reserve Funds linked out to a General Ledger (GL) account by the same name (also created by ConnectBooks, unless an account already exists by this name). The GL account type for this Reserve Funds Account is Other Current Asset.
When Amazon holds on to funds from a Settlement, ConnectBooks enters the withheld amount on to a credit memo in QBs. To do this, it uses the Amazon Reserve Funds service item. When Amazon reimburses for the withheld monies, ConnectBooks uses the same item, this time on an invoice, ConnectBooks then brings them together for the final cash Settlement total.
In the Reserve Funds GL asset account register in QuickBooks, users can see the funds being withheld (credit memo), which increases the balance, and later at time, see the funds being reimbursed (invoice), which reduces the balance. The net result of this increase and decrease in funds over a two week Settlement period should be $0. Although, it is normal for this account at any given time to have a balance that reflects the last batch of funds being held by Amazon.
For First-time Amazon Sellers and new ConnectBooks Users
For a user that uses ConnectBooks as their integration tool from the start of their business (or this seller channel), there is no need for any adjustment.
Important - For ConnectBooks users who have been selling on Amazon for a while and are moving from a different software to import their Settlements, or are new to QuickBooks, a beginning adjustment to this Amazon Reserve Funds account must be made.
As the first Settlement ConnectBooks pulls in contains an invoice reimbursing the seller for reserved funds that have been previously withheld, but either were never recorded (as would be the case in a new QuickBooks file) or was recorded using a different account, (such as owed in Accounts Receivable, or simply put towards a different GL account).
This beginning adjustment to reserve funds makes sure that all future transactions brought in by ConnectBooks will balance out again to a $0 at each settlement interval.
Alternatively, users can choose to continue to use their preferred GL asset account.
To continue to use a GL asset account:
From the Item list, select Amazon Reserve Funds.
Link this item to the preferred asset/reserve account name.
Switch earlier entries that used this item to updated account name.
Or,
Merge/rename the current asset account used for this purpose to Amazon Reserve Funds.
Adjusting the Beginning Balance for Amazon Reserved Funds
For users starting off with a new QuickBooks file:
Get the correct amount held by Amazon Reserved Funds from Seller Central by Amazon at the date of the first Settlement import from ConnectBooks.
Record a Journal Entry that debits this amount to Amazon Reserve Funds, and Credits Opening Balance Equity (You may want to confirm with your accountant if this is the correct account to put you Reserve Funds beginning balance to)
For users with existing QBs, but new to ConnectBooks:
A similar journal entry should be made, but the account where reserve funds have been recorded up until now is debited, and not the Opening Balance Equity account.