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Xero - reconciling payment intended for 3rd party

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We sell on Amazon and recently joined a program Amazon offers to sell across Europe. They offer to cover the first year of VAT returns if you sign up with one of their approved European VAT accountants, which is what we did.

So the accountants invoiced us in both EUR and GBP. First Amazon paid the money in EUR into our EUR bank account. We transferred the EUR into our GBP account and paid the accountants in GBP (plus VAT which obvious Amazon didn't include).

How do I reconcile these two transactions (the payment in by Amazon and then out to accountants) in Xero? I assume the third transaction--the transfer between accounts--is just a normal transfer in Xero.

Thanks!

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By Sarah Z
22nd Jul 2020 22:08

You enter the invoice and offset the payment that you made

The receipt from Amazon should go as a credit to the P&L to reduce the expense

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Replying to Sarah Z:
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By bodod
23rd Jul 2020 23:05

Thanks for your reply Sarah. Any chance you could simplify it for me? I always get blasted for asking this(*), but my level is super basic. Specifically which accounts should the transaction be reconciled to? I was thinking the payment from Amazon should go into a current liability account (eg suspense account?) since it's money I owe and then when I pay the accountants it can be paid out of this account again? Don't really get how that would work being in different currencies though, with the addition of vat.

* Yes, I'm an idiot who doesn't understand basic bookkeeping and yes I should learn or hire someone. Thanks, I got it :)

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