Selling on Amazon is mechanically different from running a Shopify direct-to-consumer brand. Amazon controls the customer relationship, intermediates the payment, handles fulfilment under FBA, and reports the financial picture through a settlement file that needs decoding to be useful. UK FBA sellers who try to run Amazon accounting through the same workflow as their Shopify books almost always misstate margin, misstate VAT, and miss the early signals of margin compression.
This pillar covers the specialised accounting issues for UK Amazon FBA sellers. Each section links to a detailed companion piece.
Account-level reserves are a cash-flow trap
Amazon holds back a percentage of seller payouts as an account-level reserve, typically 5% to 30% of rolling sales depending on account health, dispute rate, and category. The reserve is the seller's money, sitting on Amazon's balance sheet, released on a delayed schedule. New sellers and sellers experiencing a dispute spike can see reserves spike to 50% or more, triggering immediate cash-flow stress that destroys otherwise-profitable businesses.
Decoding the settlement report
The Amazon settlement report (Payments → All Statements → Date-Range Reports) is the canonical record of every financial event in the account: gross sales, refunds, FBA fees, referral fees, FBA storage, FBA inbound placement, advertising charges, VAT collected and remitted, lost-inventory reimbursements, and the settlement payment itself. A settlement-summary tool like A2X or Link My Books posts one journal entry per settlement period mapping each line to the right chart-of-accounts code.
- Product sales: gross revenue, before fees.
- Promotional rebates: revenue contra-account, not expense.
- Refunds: revenue contra-account, plus refund FBA fee credit.
- Selling fees: referral fee (variable %), variable closing fee (media).
- FBA fees: per-unit fulfilment fees by size and weight.
- FBA storage: monthly storage plus long-term storage surcharges.
- Advertising: Sponsored Products, Sponsored Brands, Sponsored Display.
- Other: reimbursements, claims, settlement adjustments.
PPC ROAS and financial ROAS
Amazon PPC ROAS (return on ad spend) in the Sponsored Products console is gross sales attributed to the ad divided by ad spend. Financial ROAS is the gross margin attributed to the ad divided by ad spend, after referral fees, FBA fees, and product COGS. A campaign with a 4x console ROAS often has a 0.8x to 1.2x financial ROAS once margin is netted, and a "winning campaign" by the console may be loss-making by the P&L.
VCS and commingled inventory
The Amazon VAT Calculation Service (VCS) is opt-in: Amazon calculates and reports VAT on each transaction based on declared inventory locations. Useful for Pan-EU FBA sellers with local VAT registrations, less so for UK-only sellers. Commingled FBA (FBA Stickerless) pools your inventory with other sellers' identical units; reimbursements for lost stock use Amazon's buy-cost estimation, not your actual landed cost, often under-compensating brands with high COGS.
Vendor Central is a different business
Selling to Amazon as a Vendor (wholesale) versus selling through Amazon as a Seller (FBA retail) are fundamentally different accounting models. Vendor Central: traditional B2B revenue recognition, Amazon as your customer, monthly remittance, chargeback exposure. Seller Central: marketplace mechanics, customer is the end consumer, Amazon as platform. Brands running both routes need parallel books to avoid cross-contamination of the margin picture.
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