A marketplace seller closes the month in about seven working days by running the same nine steps in the same order: reconcile cash and payout accounts, set the settlement cutoff against calendar month end, accrue the settlement that straddles the boundary, roll inventory and post cost of goods sold, categorize marketplace fees, handle returns and reserves, review the sales tax liability, consolidate channels and entities, then run a review pass before declaring it closed. The order matters more than the speed. Skip the cutoff work and every number downstream inherits the error.
The seven-day shape of the close
Days 1 to 3 are data days. Nothing gets analyzed yet. You are pulling settlement reports, reconciling bank and payout accounts, and finishing the physical or system inventory count. Days 4 to 7 are judgment days: accruals, cost of goods sold, tax liability review, consolidation, and the review pass. Doing judgment work on day 2, before the data has landed, is the most common way sellers end up closing twice.
The IRS guidance on accounting periods and methods in Publication 538 is worth reading once if you have never formalized which method your books actually use, because most of the cutoff decisions below follow from that choice.
The worked example
Throughout this piece I will use a hypothetical seller, Northbay Supply, closing July. All figures are illustrative and made up for the example. Northbay sells on Amazon and on its own Shopify store, holds roughly 400 SKUs, and runs one legal entity.
Step 1: Reconcile cash and payout accounts
Two reconciliations, not one. The operating bank account reconciles to the bank statement in the usual way. Separately, each marketplace payout account reconciles as a clearing account: settlements posted in, deposits paid out, and a remaining balance that should equal money the marketplace owes you but has not released.
Northbay’s Amazon clearing account shows a July 31 balance of $18,400. That figure has to be explainable. If it cannot be traced to a specific unreleased settlement plus the reserve, something upstream is misposting. Shopify Payments follows the same pattern, and Shopify’s own payouts documentation explains how a payout batch relates to the orders inside it.
Step 2: Line up the settlement cutoff against month end
Marketplaces settle on their own cycles, not on your calendar. Amazon’s disbursement cycles run on a fixed cadence that almost never lands on the last day of the month. Amazon’s settlement report documentation describes the report structure and the period each one covers.
Northbay’s July settlements are clean through July 18. The next settlement period runs July 19 to August 1, which crosses the boundary. Write the cutoff down explicitly before you touch anything else: everything through July 18 is settled and posted, July 19 to July 31 is accrued, August 1 belongs to next month.
Step 3: Accrue the straddling settlement
This is the step sellers skip, and it is the one that makes month-over-month margin comparisons meaningless when it is missed.
Take the July 19 to August 1 settlement and split it by transaction date, not by settlement date. For Northbay, the portion falling July 19 through July 31 is $52,500 in gross sales and $9,450 in marketplace fees, netting $43,050. The July entry is straightforward:
| Account | Debit | Credit |
|---|---|---|
| Marketplace settlement receivable | $43,050 | |
| Marketplace fee expense | $9,450 | |
| Sales revenue | $52,500 |
Reverse it on August 1 and let the actual settlement post normally. If your reporting tool already splits settlements by transaction date, this is automatic. Software built for multi-marketplace sellers, such as ConnectBooks, handles the settlement breakdown at the line-item level rather than as a single netted deposit. Done by hand, it is a pivot table on the settlement export grouped by posted date.
Step 4: Roll inventory and post cost of goods sold
Use the roll-forward. Opening inventory plus purchases and landed costs, minus ending inventory, equals cost of goods sold. Northbay’s July roll:
- Opening inventory at July 1: $310,000
- Purchases plus freight, duty, and prep: $128,000
- Ending inventory at July 31: $322,000
- Cost of goods sold: $116,000
Now sanity check it against units. Northbay sold 9,300 units in July at a blended landed cost near $12.47, which implies roughly $115,971. The two numbers land within $30 of each other, so the roll is believable. When the check misses by five percent or more, the usual culprits are units shipped but not relieved from inventory, a receipt booked at purchase price without freight, or returns restocked twice.
Step 5: Categorize marketplace fees properly
One expense line called “Amazon fees” hides the thing you most need to see. Split at minimum into referral fees, fulfillment fees, storage fees, aged inventory surcharges, return processing, and advertising. Advertising in particular is often billed on a separate cycle from the settlement and belongs in marketing, not cost of sales, if you want channel contribution to mean anything.
Northbay’s $9,450 of accrued July fees breaks into referral and fulfillment for the bulk of it, with storage and returns processing accounting for the remainder. The categories persist month to month even when a marketplace renames a fee, which they do.
Step 6: Returns and reserves
Returns arrive late by design. A July sale can generate an August refund, so refunds hitting in July frequently belong to June orders.
Northbay processed $6,200 of refunds during July, of which $1,900 trace to June orders. If you match refunds to the original order date, June’s margin gets restated and July stays clean. If you post refunds as they land, both months are slightly wrong in a way that never resolves. Pick one method, document it, and apply it every month.
Reserves are a balance sheet item, not a revenue reduction. Money a marketplace withholds is still owed to you. It sits in the clearing account until it releases.
Step 7: Review the sales tax liability
Review, not calculate. Under marketplace facilitator rules, the marketplace generally collects and remits sales tax on orders placed through its platform, while tax on orders through your own storefront is typically your responsibility. Those are different buckets and they should sit in different general ledger accounts.
What the close requires is a look at the liability account: does the balance reconcile to what was collected and not yet remitted, and are filing deadlines calendared? Registration thresholds, nexus rules, and filing frequency vary by state and change often. Take those questions to your state’s department of revenue or to a licensed tax professional who knows your footprint. Nothing here is tax advice.
Step 8: Consolidate channels and entities
If you run more than one channel, every transaction needs a channel dimension so you can produce a per-channel profit and loss without exporting anything. If you run more than one legal entity, intercompany transfers get eliminated before consolidation and inventory moved between entities is booked at cost, not at a marked-up transfer price, unless you have a documented policy that says otherwise.
Step 9: The review pass
Before you call it closed, run six checks:
- Every marketplace deposit in the bank statement traces to a posted settlement
- No SKU shows negative inventory quantity
- Gross margin by channel moves less than three points versus the prior month, or you can explain why it moved more
- The suspense or uncategorized account is at zero
- Accrual reversals for last month posted and cleared
- Accounts payable aging matches vendor statements for your five largest suppliers
Margin drift is the highest-value check on that list. A three-point move usually means a fee reclassification, a costing error, or a real pricing change, and you want to know which before the number reaches a lender or a buyer.
Closed means the review pass ran and the checks passed. Not that the entries posted.