Disclaimer: The content of this article is provided for informational purposes only and shouldn’t be construed as legal advice. The information below doesn’t establish a professional relationship between Phonexa and the reader and should not be used as a substitute for professional consultation. We encourage you to seek qualified attorneys and financial advisors whenever you need assistance in legal matters.
Whether you’re an affiliate or an advertiser, tracking your finances is essential for compliance, strategic alignment, and timely campaign adjustments, which, in fact, not only help you multiply your income but also protect you from budget depletion. When executed properly, accounting also ensures your payments are correct and made on time, with no delays.
Although you can garner these benefits using spreadsheets and API, it’s much easier with specialised accounting software, such as Phonexa’s Books360. Preferred by performance marketers, Books360 automates your partner payouts and brings full clarity to your marketing finances by consolidating every revenue and expense detail into a unified dashboard.
Take a product tour to see how Books360 can help you elevate your accounting for affiliate marketing.
Regardless of your niche, accounting for affiliate marketing involves recording, summarising, and analysing cash inflows and outflows to ensure tax compliance, prevent fraud, inform business decisions, and attract investors.
Here are more specific accounting benefits for affiliates and advertisers:
| Advertisers | Affiliates |
| Flag fraud and stop paying for dead-end leadsEnsure that your commission payouts are timely and accurateForecast your budget to invest upfront | Opt out of low-profit affiliate programs and double down on premium onesEnsure that you receive fair commissionsDetermine your ROI and cut down on irrelevant expenses |
Accounting often seems difficult for beginners, and for good reason. The process involves complex terms and concepts, and before you can operate them, it’s vital to ensure that you understand them correctly.
Begin with fundamentals:
| Accounting model | Descirption | Best for |
| Cash-based | Recording revenues when received and expenses when paid | Smaller businesses that can afford to overlook payables and receivables |
| Accrual-based | Recording revenues when earned and expenses when incurred | Medium to large-sized companies that handle many obligations and invoices |
Commonly, aspiring businesses keep and manage their finances in Google Spreadsheets, a free yet functional solution. Thanks to leveraging Google Apps Script and supporting complex formulas, Google Spreadsheets can, for example, automatically adjust your income statement as changes are made or remind you about due payouts.
However, the best accounting software for affiliate marketing is that designed specifically for this avenue, such as Phonexa’s Books360.
Geared toward streamlining performance marketing, Books360 operates within a single, neat panel, allowing you to manage your lead-related cash flows, including payables and receivables, and check your financial snapshot without link hopping. The reporting is 100% exportable so that you can keep your team on the same page with just a few clicks.
With Books360, you can also eliminate payment delays and other errors through automated transactions, which you can conduct via bank payments, ACH payments, PayPal, and more.
Book a demo and let our professionals showcase Books360 functions in action.
Unless you’re using specialised software, the easiest way to identify cash flows is to store them in a corporate bank account. For invoices and obligations, you need an electronic document management system, preferably with greater capacity, as the number of business-generated invoices increases by 5-15% annually.
As for recording, it’s best to create multiple accounts – traditionally for assets, liabilities, equities, revenue, expenses, and withdrawals (often called dividends) – and sort your cash flows accordingly.
Here’s an example of a transaction record:
| Date | Description | Account | Credit | Debit |
| June 21, 2025 | SEO tool subscription | Software expense and cash | £800 | £800 |
Why are credit and debit equal? Balancing them is a core principle of double-entry accounting – a system that has become a staple among modern businesses – that helps you flag errors and report finances accurately.
More on why double-entry accounting is essential and how it works here:
At the end of the financial year, which usually occurs 12 months after your previous financial statements and tax filings, you need to prepare a trial balance by summarising all your accounts and ensuring that your credit and debit amounts balance.
And then, if you’re using accrual accounting, you need to adjust your entries with receivables and payables to get a more holistic view of your finances.
When having your balance in place, you’re all set to create financial statements:
Not only are these documents mandatory for filing taxes, but they also help creditors and lenders stay on top of your business’s performance and decide whether you’re worthy of investments.
In the UK, affiliate income is treated as trading or self-employment income and is subject to tax under HM Revenue & Customs (HMRC) provisions.
Since they’re self-employed, affiliates are required to file SA103S or SA100 forms, and advertisers – CT600 if they’re a limited company, and VAT return if their turnover exceeds the current VAT threshold. Both parties should also pay National Insurance Contributions (NIC).
Here’s how you can pay taxes, whether you’re an affiliate or advertiser:
Accounting unlocks countless KPIs, such as CPA, AOV, and EPC, helping you track and calibrate your marketing.
| KPI | Definition | Formula |
| Return on investment | Net profit from your affiliate programs | Net income / investments |
| Cost per acquisition | Average resources spent to acquire a new customer | Program costs / conversions |
| Average order value | Average amount of money spent per affiliate-driven order | Total revenue / number of orders |
| KPI | Definition | Formula |
| Earning per visitor | Average revenue generated by every website visitor | Total revenue / number of visitors |
| Earning per click | Average revenue from banner and link clicks | Total banner and link revenue / total clicks |
| Average payout time | Anticipated time before you receive a payout | Sum of “days to payment” / number of payments |
And although uploading your financial statements to open sources may benefit your competitors, selective data exposure can have the opposite effect. Shared KPIs help you gain investors’ trust and attract funding to help your business grow. To make things easier, add an “Investor Relations” section to your website and regularly refresh it with your performance milestones.
Perceiving accounting data is usually easier when it’s not just written, but also visualised. For example, waterfall charts – used to show the effect of your expenses on your total revenue over time – help you keep your teams on the same page regarding the efficiency of spending.
Source: Coupler
Here are some other chart types to consider:
Conducted by third-party authorities, financial audits examine your financial statements to give an unbiased opinion on the reliability of the reports you provide. Acquired credibility positively affects your relations with shareholders, regulators, and lenders.
Here’s how UK companies can conduct financial audits:
All too often, businesses have their performance data scattered across multiple platforms, forcing them to juggle panels just to find the information they need. It creates a fatiguing routine that prevents you from reaching core business objectives, slowing down scaling.
Phonexa addresses this issue by providing an all-in-one solution for web lead and call tracking, analysis, and distribution, while also handling accounting, compliance, and fraud mitigation.
“Having all in one place allows you to give your decision makers and your media buying team the right data – what’s happening and what stuff that’s working they should do more of. That’s the performance marketing logic. But it’s surprising how many systems just don’t allow you to do all of that quickly – spotting issues as you go.” – David Pickard, CEO, Phonexa, during the Pioneering Pay-Per-Call Excellence webinar
In our end-to-end performance marketing ecosystem, data is exchanged and put to action automatically, and here’s an example of how it works with Books360:
Here are two core solutions you get at a single price:
| LMS Sync | Lead management & distribution software |
| Call Logic | Call tracking & distribution software |
Features that come along and expand Phonexa’s core functionality:
Book a demo to learn how Phonexa can help you streamline your marketing efforts and accounting for affiliate marketing.
Affiliate payment software is a system that lets you track, manage, and summarise your affiliate payments in one place, helping you stay on top of your finances and make timely, impactful campaign adjustments.
In the UK, affiliate marketing is treated as trading or self-employment income, which is why it’s subject to general National Insurance Contributions (NIC) taxation. Additionally, affiliates must pay taxes under SA103S and SA100 regulations, and advertisers – under CT600 and VAT.
Besides handling compliance, accounting for affiliate marketing enables advertisers and publishers to allocate budgets and calibrate strategies based on actual data, while mitigating fraud and ensuring commissions are on point on both sides.
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