- Reconcile gross activity to net settlements rather than treating deposits as sales.
- Separate fees, refunds, reserves and timing differences.
- Track stock and VAT alongside cash, not as an afterthought.
Follow the transaction through the system
A customer payment may pass through a storefront, marketplace and payment provider before reaching your bank. Each system can use a different reporting date and deduct different charges.
Choose a source for the sales records and a method for reconciling it to settlements. If both a platform feed and a bank feed create sales, the same trade may be counted twice. Document how each integration is supposed to work.
A simple settlement bridge
Consider this illustration before VAT and other accounting adjustments: £10,000 of gross sales, less £500 refunds, £800 platform and payment fees and £200 retained in a reserve produces an £8,500 payout. The deposit alone cannot tell you the sales total or the cost of selling.
The reserve may represent money still due to the business, rather than an expense. Check whether it will be released and reconcile its balance. The exact accounting treatment depends on the platform terms and your records.
| Settlement item | Illustrative amount |
|---|---|
| Gross sales | £10,000 |
| Refunds | −£500 |
| Fees | −£800 |
| Reserve withheld | −£200 |
| Net payout | £8,500 |
Reconcile fees and returns separately
Collect reports showing the fees charged, credit notes, refunds and chargebacks. A platform fee may have a different VAT treatment from the goods sold. Do not assume every charge carries recoverable UK VAT.
Returns can cross accounting periods. Preserve the link between the original sale, return and settlement adjustment. If you only look at net bank receipts, a rise in refunds can disappear inside an apparently normal month.
Bring stock into the margin calculation
Cash spent buying products and the cost of the items sold are not always the same figure in a period. Unsold stock, damaged goods and goods in transit need appropriate records and treatment.
Review gross margin by a useful category, such as product range or sales channel. Include direct selling costs in the management analysis consistently, and be clear about the difference between accounting gross profit and a platform’s own contribution metric.
Watch VAT and overseas activity
The VAT registration test normally uses taxable turnover, not profit or the payout after fees. Sales across borders, stored stock overseas and marketplace collection arrangements can create additional questions.
Before entering a new market, map where stock is held, where customers are located and which entity makes the sale. Our VAT support can help define the issues; do not copy a domestic setup into a new country without checking it.
A useful monthly ecommerce pack
Keep a repeatable set of reports rather than downloading a different selection each time.
- Sales and refund reports for every channel.
- Settlement statements and payment-provider balances.
- Platform fees, advertising and relevant supplier invoices.
- Stock quantities, purchase costs and write-offs.
- Reserve and chargeback balances with explanations.
- Bank statements and a reconciliation of outstanding settlements.
Use the figures to make better decisions
Compare margin, refunds, advertising costs and cash timing. A channel with strong sales can still be poor for cash if it holds reserves or requires stock purchases far ahead of payment.
Our ecommerce accountants connect those reports with company accounts and tax. A weekly cash forecast is useful when growth makes stock and payment timing harder to manage.
Questions about this topic
Should I record the net bank deposit as turnover?
Usually the deposit needs reconciling to the underlying sales, fees and adjustments. It should not be used as a substitute for the full transaction records.
Can software integrations remove all reconciliation work?
They can reduce data entry, but mappings, duplicated feeds and settlement differences still need checks. Agree who reviews exceptions.
Sources & further reading
General information for UK readers, updated 3 November 2026. Examples are illustrative. Tax treatment depends on the facts and current rules; seek advice before making a decision.