How should I account for Euro Amazon payments in Sage?

[ProCab]

Good morning,

I run a small online business and I am currently doing our first year accounts in Sage.

We sell on eBay, our own website and Amazon. I've come to process our Amazon transactions and I'm not sure the best method to account for them so hoping to get some advice! We sell in Euros on Amazon's European marketplaces which complicates matters.

Here is an example of our transaction:-
1. Buyer purchases on Amazon.fr (France) in Euros
2. Amazon deducts a fee in Euros for selling our item.
3. Net amount of all customer purchases is paid fortnightly into our UK bank account at the current EUR/GBP exchange rate on that date

I have set up a bank account in Sage called 'Amazon Bank' to account for individual purchases as and when they occur. The idea was to then do fortnightly transfers from the Amazon Banks to our Current Account.

I guess the main issue is how to account for the fact we are selling in Euros, but then paid the net amount of the trailing 2 weeks sales in GBP by Amazon depending on the current exchange rate.

Any advice would be hugely appreciated.

Thanks!

 

[johndon68]

Do you have Sage 50 Accounts Professional? If so, do you want to account for the sales in Euros or in GBP?

John

 

[ProCab]

Hi John,

Thanks for your reply. I'm using Sage Instant Accounts.

Not sure to be honest - I guess I'd like to account for the sales in GBP to make it as simple as possible?

 

[johndon68]

One more question then, do you process your sales as Bank Receipts or do you raise sales invoices and then mark them as paid?

John

 

[ProCab]

Hi John,

I process sales as Bank Receipts as they are typically one off customers purchasing on ebay/amazon.

Thank you

 

[johndon68]

In which case, I'd do the following:

1. Post a bank receipt to the Amazon Bank Account for the original sale, obviously you'll have to convert the Euro amount to GBP.
2. Post a bank payment from the Amazon Bank Account to your Amazon Fees account for whatever they charge you.
3. When you get the money from Amazon, do a transfer from the Amazon bank account to your actual bank account.
4. As the exchange rate in place when Amazon transfer the money may not be the same as that when the sale took place, the balance your Amazon bank account will be either slightly over or under so you'd then post a bank receipt or payment to an Exchange Rate Variance nominal (7906)

John

 

[ProCab]

Hi John,

Thanks, that sounds sensible. I guess I could look at what the FX rate amazon used to make my fortnightly payment and apply that to all individual sales in the trailing two week period.

Is there an alternative if I wanted to account for the sales in Euros? Or would this make things more difficult/complex?

Thank you

 

[johndon68]

I guess I could look at what the FX rate amazon used to make my fortnightly payment and apply that to all individual sales in the trailing two week period.

Indeed you could and, that way, you'd not have to worry about exchange rate variances...

Is there an alternative if I wanted to account for the sales in Euros? Or would this make things more difficult/complex?

As you've got Instant Accounts, accounting in Euros isn't an option.

John

 

[ProCab]

Thanks John. Really useful advice