ERP Settlement: Financial Releases
When Koncili processes marketplace payouts, it generates reconciled entries that must be recorded within the ERP.
There are two primary methods for recording these settlements. The choice depends on the company's accounting policy and how the finance department prefers to visualize ledger records.
🔹 Model 1 - Gross Sale Settlement
- The ERP records the write-off based solely on the Gross Sale Value (SALE).
- Expenses (commissions, shipping, fees, penalties, etc.) are recorded subsequently in Accounts Payable.
Example:
| ERP Record | Value | G/L Account |
|---|---|---|
| Accounts Receivable - Sale | $ 100.00 | Sales Revenue |
| Accounts Payable - Commission | $ 10.00 | Commission Expense |
| Accounts Payable - Penalty | $ 5.00 | Penalty Expense |
| AP/AR - Shipping | $ 20.00 | Shipping Revenue |
➡️ Impact: Simplifies Accounts Receivable management but requires separate expense tracking within Accounts Payable.
🔹 Model 2 - Net Value Settlement
- The ERP records the settlement based on the Net Amount actually received from the marketplace.
- Expenses and adjustments are processed within the same flow, either detailed by type or aggregated into a single entry.
Detailed Example by Type
| ERP Record | Value | Balance Impact | G/L Account |
|---|---|---|---|
| Accounts Receivable - Net Sale | $ 105.00 | Credit | Net Sales Revenue |
| Expense - Commission | $ 10.00 | Debit | Commission Expense |
| Revenue - Shipping | $ 20.00 | Credit | Shipping Revenue |
| Expense - Penalty | $ 5.00 | Debit | Penalty Expense |
Aggregated Expense Example
| ERP Record | Value | G/L Account |
|---|---|---|
| Accounts Receivable - Net Sale | $ 105.00 | Net Sales Revenue |
| Sales Fees | $ 35.00 | Sales-related Fees |
➡️ Impact: Reflects the exact disbursed amount with higher transparency, streamlining bank reconciliation.
⚖️ Conclusion
- Model 1 (Gross Sale): Streamlined approach, ideal for smaller operations or sellers prioritizing speed.
- Model 2 (Net Value): High-precision approach, recommended for companies requiring granular visibility into every cost driver.
📌 Koncili Recommendation
- Model 1: Best for early-stage sellers with lower order volumes or those seeking operational simplicity.
- Model 2: Best for scaling sellers with complex financial structures or those requiring detailed auditing and advanced financial reporting.
✅ Best Practices Before Choosing a Model
✔️ Accounting Alignment: Confirm if the company prefers managing expenses separately or within the primary inflow stream.
✔️ Chart of Accounts Review: Ensure specific G/L accounts exist for commissions, shipping, reversals, and penalties.
✔️ Transaction Volume: As volume scales, cost transparency becomes critical (Model 2 is generally preferred here).
✔️ Scalability: Detailing entries from the start facilitates easier expansion into new sales channels.
✔️ Audit Policy: Audited companies typically prefer Model 2 for its full end-to-end traceability.
📊 Comparative Flow: Gross Sale Settlement vs. Net Value Settlement
Diagram Interpretation:
- Model 1 (Gross Sale): The ERP records gross revenue (SALE) in Accounts Receivable, while additional expenses and revenues (commission, shipping, penalties) are routed to Accounts Payable/Receivable according to the ERP's specific configurations.
- Model 2 (Net Value Received): The ERP records the net settlement amount ($ 105.00) directly in Accounts Receivable, detailing all associated expenses within the same receivable document.