Introduction
The universe of Amazon vendor financial reporting is highly complex, and is filled with undocumented data issues and inconsistencies that make it hard to assemble separate reports into a clear financial picture. As a result, vendors often have a poor understanding of the health and profitability of their business with Amazon.
The Reason Automation Vendor Profit Toolkit (VPT) is designed to help vendors make sense of financial reports and data provided by Amazon, and leverage that data to 1) drive deeper understanding of business health and profitability at the product, category and total level, and 2) prioritize and take action on the most valuable opportunities for profit recovery in response to Amazon deductions like shortage and price claims and chargebacks.
Latest Release
The latest Vendor Profit Toolkit is V3.1, and includes the following:
- Invoice Research. Easily see all data and details connected to a particular invoice - ASIN-level details, payments, disputes, related purchase orders, chargebacks, and Co-Op
- Shortages. Discover, prioritize and take action on invoice Shortage Claims with the Shortages report and accompanying workflow. The VPT helps you understand the sequence of shortages and reimbursements for an invoice, and find unpaid claims.
- Price Claims. When it comes to price discrepancies, a fast response is paramount. Use the Price Claims report to prioritize and take rapid action on price claims.
- Chargebacks. Often the largest driver of Amazon deductions, compliance chargebacks can be difficult to recoup. But at the very least, vendors must use chargebacks as an input to operational improvement, in order to avoid/reduce them going forward. The VPT’s Chargeback reporting helps you understand major drivers, and a proprietary detailed workflow helps you take action.
- Provision For Receivable. One of the most confusing Amazon deductions. The VPT ‘PFR’ report makes it easy to see deduductions and their offsetting reversals to ensure that you are not owed PFR reimbursements.
- Finance Report Browsing. The VPT connects the universe of Amazon vendor financial reports together and lets you move seamlessly between them, following the threads of invoice, purchase order or co-op agreement.
REQUIREMENTS
- To get the most from the Vendor Profit Toolkit, and as an operations best practice, you should maintain a STRICT “one to many” relationship between purchase order (PO) and invoice. In practice, this means you can cut multiple invoices against a single purchase order, but any single invoice should relate to one PO only,
For context, Amazon generally provides vendor finance data in either a PO-centric or invoice-centric way. If the PO-invoice relationship is “many to many” (a single invoice can relate to multiple POs and a single PO can map to multiple invoices), PO and invoice data cannot be reliably joined at the ASIN level for purposes such as product-level profitability.
- The Vendor Profit Toolkit is available for the US and CA and the UK, with other EU marketplaces being released throughout Q3/Q4. Please contact us for latest availability information.
VPT Structure
The Vendor Profit Toolkit contains two general report types.
Research Reports
These specialized tabs are starting points for accessing your financial data, each oriented around a particular subject - Invoice Research, Shortages, Price Claims, Chargebacks, and Co-Op research, for example. There is also a Dashboard tab that surfaces high-priority information across these domains. Navigate to Research Reports using the tabs at the bottom of the screen.
Readout Reports
Think of these reports as similar to equivalents you can download from Vendor Central, but interconnected and inter-navigable. For instance, there are readout tabs for invoicing data tables (sourced from the RA tables invoices_summary and invoices_details), purchase orders (orders_confirmed_pos) and CoOp (payments_distributor_shipment_details, payments_customer_shipment_details). You can browse to these tabs directly using the direct navigation block at the top of each page, which also serves as a map of report groupings and the paths between them. You can click on any of these buttons to go straight to the corresponding Readout report (with no filters applied).
You can also move between Readout Reports using Drill Through by right-clicking on a row in one report to move to another, to see results filtered to items in the drill-through row. See below for more detail on VPT navigation.
Direct Navigation
Drill-Through Navigation
Follow the thread of activity across reports via invoice number, PO, shipment id or co-op agreement by navigating via Drill-Through. In the example below, from the Invoices table on the Invoice Research report, we can right click on an invoice number and select Invoices Details. From there, we can jump to any of the Purchase Order group reports, by right-clicking on invoice number or PO. By drilling through, the resulting report will be filtered to results for just that PO or invoice number (filters can be cleared for any page using the ‘Clear Filters’ button at the top right).
Invoices - Grouping and Connecting
Treatment of invoice numbers within Amazon vendor finance data can be confusing. In addition to your original invoice, new “child” invoices will often be generated by Amazon with suffixes added to the original invoice number. Take the following example (from the VPT Shortages report):
This invoice sequence contains the original vendor invoice, a shortage claim (which is later reimbursed by Amazon) and two pricing claims (that are not reimbursed). To keep track of and properly connect all these invoice variants, VPT organizes them under ‘Invoice Group’, a reference to the original base invoice number. This allows you to view all related child invoices generated downstream from a single vendor invoice.
VPT Research Reports
Dashboard
View trends and The VFB Dashboard surfaces opportunities for payment operations and margin improvement.
Invoice Research
When you have a specific invoice or set of invoices you want to understand in more detail, Invoice Research is your starting point. Find or search for a particular invoice or invoice group to see all derivative invoices, ASIN-level details, associated payments data and disputes, as well as related PO, chargebacks and accrual agreements. You can restrict your search to an invoice date range, or filter on invoice source or status. Drill through to other destinations by right-clicking on invoice number or PO.
Shortage Research
Amazon issues Shortage Claims when they are unable to fully reconcile products invoiced by the vendor against receipt information generated by the FC. The first claim will typically be made a few days before the invoice due date. Amazon will pay the original invoice amount “in full” and create a second invoice with a deduction for the shortage claim, reducing the effective payment to the vendor. Further shortage claims may be deducted by Amazon later in the process. As Amazon corrects receive errors in the weeks following a shortage claim, reversals (reimbursements) will be issued, crediting previous deductions.
The best way to understand shortage deductions is to look at the chain of events surrounding a particular invoice, in chronological order. The example below shows an ‘Invoice Sequence’ from the Shortages Report (a chronological grouping of all payment activity related to that invoice):
This invoice had a due date of 4/27. Amazon pays it on 4/29, while also issuing a shortage claim (SC). A missed adjustment claim (MAC - an inventory adjustment made later in the process after the initial invoice is matched and paid) is added 2 weeks later. Amazon then makes a Shortage Claim Reimbursement (SCR) reversing the original SC, but adds another SC on 5/8. A month after that, Amazon pays off both the SC and the MAC in a single payment credit, but adds one more shortage claim, which remains open and is unlikely to be paid.
The Shortage Research report helps vendors track and make sense of shortages, and surfaces the most valuable opportunities for disputing shortages with Amazon, at the right time. The dashboard is designed around the following shortage workflow:
1) Wait 60 days before filing disputes on shortages (you can file a dispute only once per invoice, so it’s best to allow Amazon time to work through their own receive process before doing so). Prioritize high-value opportunities first - file disputes on high-value shortages on invoices >60 days old that have yet to be disputed.
2) Review invoices that have been disputed to see what shortages may still remain, and file Vendor Central cases where you have proof Amazon is error.
3) For any shortages that remain after the above steps, consider pursuing them in batches via the open statement process.
Use the following UI elements to search for invoices with shortages. Clicking on an invoice in the ‘Invoices with Shortages’ table, or searching for/selecting an invoice in the Invoice (Group) dropdown filters other tables on the page to that invoice.
To follow the workflow above, first set '60 Days Past Due’ to 'True' and 'Disputed?' to N. Research the resulting shortage claims, and file disputes in Vendor Central as appropriate. Work in order of opportunity - sort by Remaining Unpaid (original invoice amount minus net of deductions and payments).
Next, review invoices with remaining shortages that have been disputed by setting 'Disputed?' to N, and file Vendor Central cases as appropriate.
Finally, for invoices with shortages where Amazon is in error but disputes and VC cases are unsuccessful, consider an open statement process (resources for this coming soon).
Once a single invoice is selected in the above UI, review the Invoice Sequence table to see the chronology of payment events.
Invoices with related disputes will have a Dispute ID somewhere in the Invoice Sequence, although the dispute may not be related to the pricing claim. Check invoice status and dispute details in Vendor Central to verify.
NOTE: The VPT is not currently able to capture Credit Memo data - if you have issued Credit memos in response to Amazon deductions, these will need to be verified in Vendor Central.
Price Claim Research
The Price Claim Research report works similarly to Shortages Research, although unlike shortages, speed is a higher priority. Allowing price issues to go unchecked can set precedent that a lower price has been "soft approved".
The table at the top of the report shows Invoices that have both price claims and a Remaining Balance. Click on an invoice of interest to filter other reports to that invoice group (sort by Price Variance to prioritize high-value opportunities). You can also use the slicer to search for an invoice number if you already have a target, and limit the invoice date range.
'Price Variance' is the total of all Price Claims made by Amazon. 'Remaining Unpaid' is the original invoice amount minus the net of deductions and reimbursements from Amazon. If these two values are equal, then the underpayment of the invoice is due entirely to Pricing Claims (otherwise there are likely other deductions happening with this invoice, such as shortage claims). Once you have filtered to a single invoice, check the ‘Invoice Sequence’ table for any invoice to see the chain of events.
Invoices with related disputes will have a Dispute ID somewhere in the Invoice Sequence., although the dispute may not be related to the pricing claim. Check invoice status and dispute details in Vendor Central to verify.
Note - these reports do not currently capture Credit Memos a vendor submitted to close out claims in Amazon's favor. These must be viewed in Vendor Central.
Chargeback Research
Chargebacks are a high-visibility issue for vendors because they are often the single largest source of deductions from a financial standpoint. But getting reimbursed for chargebacks can be challenging, as often the charges are legitimate, at least from Amazon’s standpoint. Disputing chargebacks will usually be a high-effort, low value endeavor. However, the high-value opportunity with chargeback data is to use it to drive future operational improvements, eliminating chargeback root causes and lowering the magnitude of charges over time. The Chargeback Research report helps you examine chargebacks by issue and product, tracking magnitude over time and surfacing dispute opportunities. To help you respond to your findings, check out the ‘Chargeback Bootcamp’, a companion VPT resource that helps you understand and remedy chargeback root causes.
Click on individual issues within the ‘Chargebacks by Type/Amount’ table to filter the ‘Dispute Opportunities’ table. Alternately, select products in ‘Chargebacks by ASIN’. Both of these tables use Chargeback amount for sorting order.
Provision for Receivables
Amazon makes ‘Provision for Receivables’ (PFR) deductions when they are concerned that balances owed to vendor will be insufficient to cover future Amazon deductions. These are short term deductions, typically reversed in a week. In payments data, both the original deduction and the reversal usually have the same date code prefix, and so we can match them up and make it easier to see that PFRs have been settled properly.
In the example below, we see that the most recent deduction does not have an offsetting payment, while prior ones do (they net to zero). Click on a row to see the deduction and related payment.
A negative value means a deduction exists without corresponding credit. Here are scenarios where this can happen:
- It is possible that a particular credit pays off two deductions, and has the date reference of the second deduction and therefore does not match the first. Look for a similar offsetting value with a nearby date code, e.g. 231113 and 231114.
- An unsettled deduction has an offsetting credit memo. The data set used by VPT does not currently capture credit memos and so this would need to be verified in Vendor Central.
- A payment from Amazon to vendor may have failed. Check the 'Related Payments with Status' table below left to ensure that all related payments are 'Successful'.
- It is possible that Amazon made a mistake. If you can't find an offsetting credit for a deduction that is not recent, file a Vendor Central case to find out why and whether you are owed money.
CoOp Research
View comprehensive details on CoOp by agreement ID or at the product level (searching by ASIN or product title) with the CoOp research tab. This tab covers both Distributor and Customer CoOp agreements.
Vendor Profit Toolkit - ‘Product’ BetaOn this page
- Introduction
- Latest Release
- REQUIREMENTS
- VPT Structure
- Research Reports
- Readout Reports
- Direct Navigation
- Drill-Through Navigation
- Invoices - Grouping and Connecting
- VPT Research Reports
- Dashboard
- Invoice Research
- Shortage Research
- Price Claim Research
- Chargeback Research
- Provision for Receivables
- CoOp Research
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