Operations
Month-end close for a trading business: a 10-step checklist
A practical month-end close checklist for Bangladeshi traders and wholesalers: cut-off, bank and wallet reconciliation, stock, VAT, receivables and review.
In many trading businesses the month-end close is an event: the accountant disappears for a week, the owner asks for the profit figure on the 20th, and the number changes three times before it is believed. The close does not have to be like that. A trading business, with its buy-store-sell cycle, has a fairly small set of things that must be true at month end. If you check them in a fixed order, the profit figure stops moving.
Below is a ten-step checklist. It assumes you buy goods locally or import them, hold stock, sell on cash and credit, and file monthly VAT returns.
Before you start: agree a calendar
Decide the working days. For example: day 1 cut-off, day 3 bank and stock done, day 5 reports reviewed, day 7 locked. The calendar matters more than the exact days. VAT filing is due by the 15th of the following month, so your close should be finished comfortably before that.
The checklist
1. Cut-off: stop the clock
Confirm that all sales, purchase, receipt and payment documents dated in the month are entered, and nothing from the next month is. Ask the store for the last goods received note and the last delivery challan numbers. Any invoice without a matching delivery, or any delivery without an invoice, goes on a list.
2. Bank, cash and wallet reconciliation
Reconcile every bank account, the petty cash box and every mobile wallet to the statement or physical count at month end. Differences go on a short list with names. See our article on reconciling bKash and Nagad collections for the wallet method.
3. Receivables: apply and age
Make sure every receipt is applied to an invoice or sits as an identified advance. Run the aging report and look at the top ten overdue customers. Note which have been contacted and what they promised.
4. Payables: match and accrue
Enter every supplier bill received, and accrue for goods received but not yet billed. Check your top suppliers against their statements if you have them. Record payments made and cheques issued but not yet presented.
5. Stock: system against reality
At minimum, count your fastest-moving or highest-value items each month and compare with the system. Investigate differences before posting adjustments. Check for negative stock, which usually means a sale was entered before the purchase or a unit of measure was wrong. Confirm that goods in transit and imports awaiting clearance are treated consistently.
6. Landed cost and import entries
For shipments received in the month, make sure all freight, duty, C&F and port costs known so far are linked to the consignment, and flag any that are still awaited, so the stock value is not understated.
7. VAT and source tax
Reconcile output and input VAT ledgers to the Mushak records. Check that VAT and tax deducted at source on payments are recorded and that the liability balances agree with what you have deposited.
8. Accruals, prepayments and depreciation
Post recurring month-end journals: rent, utilities, salaries and benefits owed, prepaid insurance, loan interest, and monthly depreciation. Recurring items should be templates, not retyped.
9. Review the numbers, not just the totals
| Check | What to look at | Why |
|---|---|---|
| Gross margin % | Compare with last month and with your normal range | A drop can mean a cost error, stock error or discounting |
| Expense lines | Any line far above or below the usual | Misposting or missing accruals |
| Stock vs cost of sales | Does stock movement make sense against sales? | Catches missing receipts or unrecorded issues |
| Suspense and clearing accounts | Should be zero or explained | Unallocated items hide errors |
| Receivables and payables totals | Agree to the subsidiary ledgers | Detects direct journals into control accounts |
10. Lock the period and report
Lock the month so that later changes need an authorised reopening, then issue the management pack: profit and loss, balance sheet, cash position, receivables aging and stock summary. Short and consistent beats long and different every month.
Common reasons the close drags
- Documents arriving late from branches, the store or sales staff with no cut-off discipline
- Bank reconciliation done once a quarter and so full of old items
- Stock adjusted by guesswork rather than counted
- Invoices keyed twice, once in the accounting system and once for VAT
- No single owner for each step, so each waits for someone else
Make it shorter every month
Keep the checklist as a live document, with a name and a date beside each step. After each close, ask what caused the longest delay and fix that first. Within a few months, the close that took a week should take two or three days, and the profit figure you give the owner on day five will be the one you give on day thirty.