This article is relevant if you sell goods in Amazon Seller Central and you use NetSuite for your accounting.

Background

NetSuite’s capability as a comprehensive financial and inventory management system makes it an ideal match for businesses selling products on Amazon. These companies must navigate the complexities of Amazon’s Seller Central system to effectively market and distribute their goods. To be highly effective requires a nuanced approach that intertwines several selling and inventory operational practices to exploit the full potential of both platforms.

However, operational integration, while the first major task to activate on Amazon’s program, is only half the challenge. The subsequent concern lies in accounting for all the resultant transactions. Organizations typically grapple with Amazon’s transactional summaries, striving to reconcile and make sense of them within their financial records.  This process often involves collecting and interpreting data from Amazon’s two-week batch cycles to formulate corresponding accounting entries.  I can’t say how many times I see organizations focus on a new business capability only to “throw it over the fence” which forces the Accounting Department with a mess to deal with.

Facing this challenge, while many clients have sought to leverage our high-performance Record Import Export Manager (see my 2020 article, Fully Automate Complex NetSuite Data Imports) to automate the input of general ledger entries from Amazon’s CSV files, one client set their sights even higher. They demanded a solution that would enable real-time transaction downloads, bypassing the wait for Amazon’s two-week cycle and achieving a completely automated integration to NetSuite.

Falling Short: Tools with Limited Integration with Amazon Seller Central

Clients with dedicated NetSuite administrators frequently employ third-party integration tools. However, these tools often fall short of providing the advanced capabilities necessary for a fully automated and instantaneous Amazon integration.

In my 2022 article, Contrast Platform vs NetSuite Point-to-Point Integration Options, NetSuite-driven companies have alternatives. While third-party tools, such as Celigo, are helpful, they frequently do not have the sophistication needed to address a real-time, fully automated NetSuite-based Amazon Seller Central accounting solution.

In my 2022 article, I outlined how companies using NetSuite aren’t limited to third-party offerings. Despite the utility of Celigo and other tool integrations, they lack the advanced features needed for a seamless, real-time Amazon Seller Central accounting solution integrated with NetSuite.

Addressing this gap, our team developed two key integrations without any dependency on other tools or frameworks:

1. Inventory Management: in my article, Exploring a Fully Automated NetSuite Integration to Fulfillment By Amazon Seller Central, I delve deep into our strategy for stocking Amazon warehouses, coordinating with third-party logistics, printing shipping labels, working with cartons and pallets, and ensuring efficient inventory replenishment and fulfillment.
2. Financial Accounting: the focus of this discussion, where we meticulously managed revenue accounting, inventory decrement, cost of goods sold, and all other miscellaneous Amazon charges and reserves. We did so while maintaining a focus on high-efficiency bank deposit accounting and reconciliations.

The great advantage of our approach is that, once implemented, it eliminates the ongoing integration costs that are typically associated with third-party tools such as Celigo, Boomi, Workato, or Oracle NetSuite itself.

Amazon Seller Central Finance-Driven Requirements

In collaboration with the client’s financial controller, we crafted a system that processes transactions in real-time while accommodating Amazon’s batch-processing framework:

1. Sales: Each Amazon sale is recorded via a shaped NetSuite Cash Sale transaction that impacts an Amazon payment clearing account, a method detailed in my 2018 article on electronic payment reconciliation best practices. This setup not only automatically reduces inventory levels but also handles the cost of sales accounting. It incorporates Amazon’s associated fees at the transaction level, enabling detailed profitability analysis for each order.
2. Returns: We mirror the sales process for returns, utilizing a NetSuite Cash Refund transaction to adjust the Amazon clearing account, ensuring accurate fee accounting is maintained.  While this client’s returns requirements were straightforward, we have been known to tackle sophisticated, comprehensive NetSuite-driven return narratives.

Amazon’s batching methodology operates on a two-week “Open” period, amassing transactions until the close of this cycle, facilitating their standard, downloadable Seller Central reports (the starting point for Accounting departments’ attempts to get in front of this concern). However, by tapping into the Amazon Seller Central Finances API, we’re able to extract all transaction details before the batch closes. This provides us with the ability to align our transaction accounting more closely with NetSuite’s real-time processing standards.

Accounting for Amazon’s Various Batch Level Fees

Navigating Amazon’s myriad of batch-related program fees—distinct from transaction-specific charges—requires a targeted approach due to their impact on the total funds transferred from Amazon to the business’ operating bank account.  We adopted a batch-focused accounting method with the following steps:

1. Batch Closure: Upon Amazon’s batch completion, we systematically direct each type of fee to the appropriate general ledger account. Amazon’s program reserve adjustments, both debits and credits, significantly influence the net funds disbursed, necessitating their capture in a specially tailored journal entry within NetSuite.
2. Period-End Accruals: Given the approach, prior to the batch’s official closure, we have the capability to download and interpret the prevailing Amazon program fees associated with the batch. This enables us to auto-generate a custom, reversible journal entry at the period’s end, streamlining financial statement accuracy and compliance with accounting standards.

Finally, a solution that is designed with Accountants in mind.

Integrity Driven Batch Control Totals

Amazon’s batch control totals present an opportunity to verify the accuracy of our automated Amazon Seller Finances API integration. By tallying all transactional and program fee amounts and juxtaposing these against Amazon’s reported totals, we ensure the reliability of our hands-off integration process.   Accountants develop trust by reviewing their standard reports against our batch controls.

The precision in our setup of clearing accounts to anticipate cash flows makes the bank reconciliation process remarkably straightforward and efficient.

For a visual perspective on how these processes come to life, you can examine the structural frameworks by clicking the linked images.

Watch the Amazon Seller Central Financial Integration Demonstration (7:01)

The work was produced by both our Inventory and Technology Practices in my firm. I interviewed Jacob P., Business Analyst, on the work completed to gain an appreciation of their hard work and success. I am in gratitude, as is our client, for the team’s leadership.

Click here to watch the video (7:01):

Get The Amazon Seller Central NetSuite Integration

The solution crafted for NetSuite to Amazon Seller Central integration exemplifies our approach: an attentive ear to client-specific business and accounting needs followed by the deployment of resourceful, well-constructed solutions that prioritize control, ease of use, and reliability, all while maintaining cost-effectiveness.  This is the power of working with highly capable talent.

By sidestepping the use of third-party tools in this integration, we eliminate the necessity for extra expenditures on software or ongoing services. This method falls under the umbrella of Prolecto Labs, a meaningful collection of algorithms and software suites readily accessible to our clients with no licensing fees.  Prolecto Labs embodies over 15+ years of inventive outputs that enhance our service-driven offerings, cementing the notion that while tools facilitate, the human element is indispensable for successful implementation.

If you found this article relevant, feel free to sign up for notifications to new articles as I post them.  If you are ready to tackle your Amazon Seller Central to NetSuite Financial Integration challenge, let’s have a conversation.

Marty Zigman

Holding all three official certifications, Marty is regarded as the top NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.

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