Overview:
- What are Amazon reserve balances?
- How does Amazon identify the amount of the reserve?
- How long does Amazon hold reserve balances for?
- How to check your Amazon balance reserve
- Reserve balances and Balance Sheet
- Accrual accounting for reserve balances
- How Synder accounts for Amazon balance reserves?
What are Amazon reserve balances?
Amazon reserve balances are funds withheld from sellers’ payouts for specific reasons. These balances serve as safeguards for Amazon to cover potential risks tied to your account, such as chargebacks, returns, or claims.
Marketplace-Specific Reserve Balances
If you sell on multiple Amazon marketplaces, each marketplace manages its own reserve balance separately.
Scenarios Where Reserve Balances Are Applied
1. Chargebacks and disputes: When a customer disputes a transaction, Amazon may hold the transaction amount in the reserve balance until the issue is resolved.
2. Returns and refunds: For products with a high likelihood of returns, Amazon may hold back a portion of the payout to cover potential future returns.
3. High-value transactions: For expensive items, Amazon may increase the reserve balance temporarily to mitigate risks such as fraud or costly chargebacks.
Amazon reserve balances may be listed under different names across their platform, including: Account Level Reserve(s) / Unavailable Balance(s)/ Current/Previous Reserve Amount(s).
Despite the different labels, they all refer to the same concept: the reserve balance held by Amazon.
Reserve Balances vs. Pending Balances
It’s important to understand the difference between reserve balances and pending balances:
- Reserve balances: Funds held to mitigate risks, as described earlier.
- Pending balances: Negative settlement balances owed to Amazon, which can be recovered from future sales or charged to your credit card as a “Successful Charge.”
How does Amazon identify the amount of the reserve?
Amazon evaluates seller performance through metrics such as:
1. Seller performance
- Order defect rate (ODR): High rates of defects or complaints can lead to Amazon increasing the reserves held in your account.
- Cancellation rate: Frequent cancellations signal risk.
- Late shipment rate: Shipping delays can increase customer dissatisfaction, which may cause Amazon to raise the reserve balances in your account.
2. Sales volume and selling history
- New sellers: Without an established track record, new Amazon sellers may face higher reserves due to increased perceived risk.
- Sudden sales spikes: Rapid growth in sales volume can trigger higher reserves, as Amazon may view them as potentially fraudulent or unstable.
3. Product category risk
Certain categories, such as electronics or apparel, are more prone to returns and customer dissatisfaction. Sellers in these high-risk categories often face increased reserve balances in their Seller Central account.
4. Return and refund rates
High rates of returns and refunds are red flags. Sellers with frequent refunds are likely to experience higher reserves to cover potential future claims or disputes.
5. Chargeback claims
A high volume of chargeback claims indicates higher business risk, prompting Amazon to raise the reserve balance as a precaution against future chargebacks.
6. Seasonal adjustments
During peak seasons, like holidays or shopping events, reserve balances may temporarily increase to account for higher sales and other transaction volumes and associated risks.
7. Bank account validation issues
Issues with validating your bank account in the Amazon Seller Account may result in reserve balances being held until the problem is resolved.
Optimizing for seller success: Understanding these factors can help sellers manage reserve balances effectively, reduce risks, and improve their business cash flow. Maintaining strong performance metrics and addressing risks proactively can help sellers minimize the impact of reserve balances on their payouts.
How long does Amazon hold reserve balances for?
Just like the reserve balance amounts, the length of time Amazon holds reserve balances can vary based on several factors.
Generally, Amazon implements a rolling reserve system, holding a portion of a seller’s funds for a set period before releasing them. This timeframe is designed to cover the window when customers might return items or file claims.
Some factors that might influence the holding period for reserve balances include:
- Standard reserve periods: The common reserve period is typically between 14 and 90 days. The exact duration can depend on the seller’s performance, sales history, product category, and other risk factors assessed by Amazon.
- Time selling on Amazon:: New sellers or those with a limited selling history on Amazon might experience longer reserve periods. This is because Amazon has less data to assess their reliability and risk profile.
- High-risk categories: Sellers operating in categories with higher rates of returns, claims, or chargebacks might face longer reserve periods.
- Seasonal adjustments: During peak shopping seasons, such as holidays, Amazon might extend reserve periods to account for the increased volume of sales and potential for returns or claims.
- Performance-based adjustments: Amazon sellers with poor performance metrics (like high order defect rates, cancellation rates, or late shipment rates) may be subject to longer reserve periods.
How to check your Amazon balance reserve
Sellers can typically find detailed information about their reserve balance(s) in their Amazon Seller Central account. As mentioned, it’s important for sellers to regularly review their account status and performance metrics to understand how these factors may affect reserve balances and how long they’re held.
To check your reserve balance:
- Log in to Amazon Seller Central.
- Click the menu icon in the top left, and navigate to ‘Reports’.
- Click ‘Payments’.
- In the ‘Payments’ dashboard, follow either of these options to see your reserve balance:
- Option 1: Select ‘Statement View’, then scroll down and look for the amount listed under ‘Account Level Reserve’.
- Option 2: Select ‘Transactions View’, then filter by ‘Unavailable Balance’ and select your desired date range.
If you have questions about your balance amounts, check Amazon’s help resources in Seller Central for detailed information.
Reserve balances and Balance Sheet
As noted earlier in this guide, tracking and accounting for your store’s reserve balances can help you better understand your business cash flow, plan, budget, manage business risks, and more.
The most important reason to account for your store’s reserve balances is to create an accurate Balance Sheet. This report highlights your assets, liabilities, and shareholders’ equity, giving insights into your business’s financial health. An accurate Balance Sheet is essential if you’re looking to secure a loan or sell your business.
It is especially important to include reserve balances into your Balance Sheet because they represent the money Amazon owes you, which is a current asset for your business.
Failing to record reserve balances accurately could misrepresent your business’s value and performance – especially if you have large reserve amounts.
Accrual accounting for reserve balances
Accurately accounting for reserve balances is essential to ensure they appear correctly on your Balance Sheet.
Accounting experts recommend using the accrual method of accounting as the most accurate accounting method for ecommerce businesses.
Accrual accounting recognizes revenues when they are earned and expenses when they are incurred, regardless of when cash is actually received or paid. This means that sales associated with Amazon reserve balances are recognized as revenue at the time of sale, not when the cash is received.
With this in mind, Amazon reserve balances create a gap between when revenue is earned and when cash is received, which can lead to accounting challenges and complications.
How Synder accounts for Amazon balance reserves?
Fortunately, apps like Synder can help you overcome some of these challenges and easily manage your finances using the accrual accounting method. Here is an overview of how Synder works.
A few notes:
- The process will be similar, whether you use QuickBooks Online, Xero, or any other accounting software. Any differences will be outlined in this guide.
- Make sure you are entering the correct reserve balance for the correct accounting period (double-check dates).
- Working with an ecommerce accountant is highly recommended to ensure you meet your business’s specific accounting needs.
| Transaction Name | Description | How to Sync |
| Other Transaction → Current Reserve Amount Balance | This refers to the amount currently held by Amazon as a reserve (negative amount in the report) | “Transfer” transaction To account: Asset account ‘Balance Reserve’ (debit) From account: Settings → Sales tab → Clearing account (credit) |
| Other Transaction → Previous Reserve Amount Balance | This refers to the reserve amount that Amazon has released (positive amount in the report) | “Transfer” transaction From account: Asset account ‘Balance Reserve’ (credit)To account: Settings → Sales tab → Clearing account (debit) |
Note: Different accounting platforms will create different types of entities.:
- QuickBooks Online and Desktop: A Transfer is created to account for Amazon balance reserves.
- Xero: Positive transactions are recorded as “Invoice + Payment,” while negative transactions are recorded as “Credit Note + Cash Refund.”
Tip: Why invoice and Bill? Because Transfer can’t work with Asset accounts and Receive Money is not available for rollback.
By default, to process reserves, Synder will create a “Reserve balance” account of the “Asset” type (“Other current assets”) in your Chart of Accounts.
Note: For QuickBooks Desktop, the “Bank” type account is used because it doesn’t allow currency settings for Asset account types.
You can at any time change the default Reserve Balance accounts to the one you need by following the steps below:
1. Go to Synder ‘Settings for Amazon’ → ‘General’ tab. Set the needed account under the ‘Balance Reserve’ account dropdown.
2. Once this account is set, sync a balance reserve transaction (Select it in the list and click ‘Actions’ → ‘Sync’). Wait until the status changes to “Synced” (green), indicating that it has been successfully added to your books.
3. Open the newly created transaction in the accounting platform to check the result
(The example below is for Xero).
Multicurrency
In case you have Amazon balance reserves in multiple currencies, an extra setup might be needed to ensure everything is accounted for correctly.
1. Xero: By default, a single asset-type account o is created in the Chart of Accounts, and all Amazon balance reserves are synced to this account. Asset accounts in other currencies cannot be created, so any currency conversion adjustments must be done manually. If Amazon doesn’t provide an exchange rate, Xero will apply its default rates for conversion.
2. QuickBooks Online: By default, a single “Other current asset” account is created, and all balance reserves are synced to this account. Additional asset accounts in other currencies can be created manually and configured in Synder settings to track Amazon account-level reserves. If clearing accounts in multiple currencies are selected in Synder, the sync of the balance reserve can fail, since the “from” and “to” accounts must be in the same currency.
To ensure proper tracking, an additional account for each currency (e.g., Balance Reserves CAD, EUR, GBP, etc.) should be created manually in the Chart of Accounts.
Once these accounts are set up, configure them in Synder settings as follows:
Click the gear icon to access the currency options. Select the appropriate accounts for each currency accordingly.
3. QuickBooks Deskop: A single “Bank” type account is created for Balance reserves by default. For transactions in other currencies, the sync will fail with an error, prompting you to set up an account in the correct currency within Synder settings. Additional accounts for Balance Reserves should be created manually in the Chart of Accounts and assigned in the settings accordingly.
Reach out to the Synder Team via online support chat, phone, or email with any questions you have – we’re always happy to help you!