This describes a pattern we see repeatedly rather than one client. No client name, figure or result appears on this page.
The situation
A seller is live on their own store and on at least one marketplace. Each channel reports sales its own way, pays out on its own schedule, and deducts its own fees before the money arrives. The bank shows a series of net deposits that match nothing in the sales reports.
The books get built from those deposits, because that is what is visible. Revenue is then understated by every fee that was deducted before payout, refunds disappear into the net figure, and the margin on the profit and loss is a number nobody can trace back to a product.
What is actually wrong
- Revenue is recorded net of fees, so both the revenue line and the cost lines are understated and the 1099-K will not agree with the books
- Refunds and chargebacks are buried inside payouts rather than reducing revenue in the period they happened
- Stock bought in one period and sold across several is expensed when paid for, so cost of sales has no relationship to what was sold
- Marketplace-collected sales tax is sitting in revenue, inflating it
- Nobody can answer what a given product actually earns after fees
How it gets fixed
Separate the accounts
One bank account per channel where the platform allows it, and nothing personal running through any of them. Everything downstream is easier once a deposit can only have come from one place.
Record the sale, not the payout
Each channel's settlement is broken into its parts: gross sales, refunds, each fee type, and any tax the marketplace collected and remitted. The payout becomes the net of those, which is what the bank then matches.
Build the cost of sales from stock
Purchases go to inventory when bought and come out as cost of sales when sold, on a consistent costing method, with landed cost captured at purchase rather than estimated later.
Reconcile every channel monthly
Platform gross sales to the books, payouts to the bank, and stock on hand to the ledger. A difference found in the month it arose is a question. The same difference found a quarter later is an investigation.
Read margin by channel and by product
Once fees are their own lines and cost of sales comes from stock, the margin on each channel and each product is a report rather than a guess.
What changes afterwards
- Revenue in the books agrees with what the platforms report, so the annual information return is a check rather than a surprise
- The return rate is visible as its own line, which is usually the earliest warning that something is wrong with a listing or a supplier
- Stock on the balance sheet means something, so a lender or a buyer can rely on it
- Pricing decisions get made on margin after fees, which is the only margin that pays anybody
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