Month-End Close in a Pharmacy: A 5-Day Playbook Owners Can Trust

If you’re a pharmacy director, you already know the feeling: you’re busy running the shop, managing staffing, dealing with suppliers, and trying to grow services, yet you’re still expected to “know the numbers”. The problem is that pharmacy numbers are only useful when they’re fast, accurate, and explained in plain English.

This guide gives you a repeatable five-day month-end close playbook, designed specifically for pharmacy businesses, so you can close quickly with confidence and get management accounts with consistent commentary you can actually use.

RX Virtual Finance LTD supports pharmacy directors by building the month-end workflow, tightening controls, and delivering management accounts that are decision-ready, not just “done”.

What does month-end close actually mean in a pharmacy?

Month-end close is simply the process of finishing the month’s finances properly, so you can trust what you’re looking at. In a pharmacy, that means your figures are backed by evidence and reconciliations, not “best guesses”.

This matters more in pharmacy than in many other sectors because the numbers are shaped by timing and quirks such as:

• NHS payment cycles and adjustments
  
• wholesaler credits and rebates that land later than you expect
  
• seasonal stock builds (flu season is the obvious one)
  
• card settlement timing and merchant fees
  
• locum costs that arrive as invoices after the work is done
  

When close is done properly, you get more than a profit number. You get clarity on margin, staff cost, stock, and cash flow.

Here’s a common scenario. A director sees a healthy profit on the software but wonders why the bank balance still feels tight. Once you run a clean close, you often find the “problem” isn’t profit at all. It’s timing: stock build has soaked up cash, supplier invoices were posted late, and NHS receipts did not align neatly with activity.

Why is five working days the best target for pharmacy month-end?

Five working days is a realistic point where speed and accuracy can live together.

Close in two days and you tend to miss the reconciliations that make the numbers believable. Close in three weeks and the numbers arrive too late to change anything. Five days pushes the right discipline without turning month-end into a crisis.

The bigger win is that once you can close in five days, you start to get consistent commentary. And that’s what pharmacy directors usually want. Not a surprise set of figures, but a calm explanation of what moved, why, and what to do next.

Imagine you’re reviewing last month’s numbers on day 23. You can’t even remember what happened in the shop that far back. Review them on day five and you still remember why you brought in extra cover, why you stocked up on certain lines, or why services volume dipped.

Here’s our month-end Flash report framework that pharmacy directors can use to improvise management reporting.

What needs to be true before Day 1 so the close doesn’t drag?

A fast close is won before the close starts. The secret is boring but powerful: routine.

You want three things in place:

• A clear cut-off rule (so the month ends when you say it ends)
  
• A consistent document flow (so nobody is hunting for reports)
  
• A simple policy for estimates (so you can keep moving without “waiting for perfect”)
  

What daily habits reduce month-end pain?

If you only fix one thing, fix the daily hygiene:

• Bank takings daily and separate cash vs card vs online receipts
  
• Save POS reports in a standard folder each day or week
  
• Capture supplier invoices as they arrive, not in a month-end dump
  
• Keep a running “queries list” so issues are tracked, not forgotten
  
• Make director spend and mixed-use transactions clear as you go
  

A good month-end close is basically a good month, repeated.

Here’s what often happens without this. Invoices sit in email, POS reports live on the shop computer, and one staff member becomes the “keeper of knowledge”. Then they go on holiday and month-end collapses.

What is the Day 1 to Day 5 schedule for a pharmacy month-end close?

This is the playbook. The key is doing the same steps, in the same order, every single month.

What happens on Day 1?

Day 1 is about setting the boundary and gathering everything you need so you’re not chasing it later.

Day 1 checklist (Lock and collect):

• Confirm the month-end cut-off date and time
  
• Save POS summaries and till Z-reads
  
• Save card terminal settlement reports (PDQ summaries)
  
• Export bank statement for the full month (even if you use bank feeds)
  
• Pull wholesaler statements and shortliner statements
  
• Download the NHS Schedule of Payments and any relevant remittances
  
• Start the month-end issues log: missing invoices, disputes, unusual items
  

If you do Day 1 well, Days 2 to 5 become straightforward.

A very typical example: a director keeps reopening the month because “one more invoice arrived”. A simple policy fixes this. If an invoice relates to the month but arrives within five working days, it gets accrued. If it arrives later, it goes into the next month with a note. That single rule stops the endless back-and-forth.

What happens on Day 2?

Day 2 is income day. This is where you turn “sales” into a reconciled number you can defend.

Day 2 checklist (Income and banking):

• Reconcile bank receipts to income channels
  
• Match card settlements to POS totals and allow for timing differences
  
• Review cash banking patterns and investigate gaps
  
• Separate merchant fees so they don’t distort income
  
• Flag oddities: spike in refunds, unusual paid-outs, sudden changes in basket size
  

A common story: POS sales look steady, but bank receipts look lower. Often it is not theft or a mystery decline. It is settlement timing, fees, or refunds being posted incorrectly. Day 2 is where you catch that quickly.

What happens on Day 3?

Day 3 is all about purchases and stock logic. In pharmacy, this is where most “accounts you can’t trust” start.

Day 3 checklist (Purchases, statements, stock):

• Match purchase invoices to supplier statements for completeness
  
• Post credit notes and ensure they are in the right month
  
• Review rebates and retrospective discounts and treat them consistently
  
• Check for unusual buying patterns, specials, and high-value lines
  
• Apply your stock method (count, cycle count, or controlled estimate)
  

You’d be surprised how often purchases are understated because the finance data relies on forwarded invoices only. Statement matching solves that. It also helps you spot missed credits and disputes early.

Picture this: you think margin is strong, but cash is constantly tight. Day 3 often reveals what’s actually happening: stock is quietly building, and purchases are not fully captured. Once you fix it, your margin becomes clearer and your cash plan becomes realistic.

What happens on Day 4?

Day 4 is where you tidy the “people” and “timing” parts of the month: payroll, accruals, prepayments, and director transactions. It also involves sanity-checking the balance sheet so you are not building errors month after month.

Day 4 checklist (Payroll, journals, balance sheet checks):

• Post payroll with meaningful splits: pharmacists, locums, dispensary, counter team
  
• Accrue missing costs: locums, utilities, IT, maintenance, professional fees
  
• Post key prepayments (annual insurance is a common one) if material
  
• Reconcile director loan account and tidy mixed-use spend
  
• Check VAT, PAYE and other liabilities are sensible and not drifting
  

This day matters because pharmacy directors often end up making decisions on drawings, dividends, and staffing without a clear view of their true position.

A typical situation: a director takes drawings “as needed” and relies on year-end accounts for the tax picture. Month-end management accounts with a director loan reconciliation quickly show whether the position is safe, and what needs planning.

Authority note: Where VAT and digital record keeping apply, this day supports Making Tax Digital requirements and helps reduce nasty surprises with HMRC.

What happens on Day 5?

Day 5 is the step most people skip. It’s the step that turns accounts into management accounts.

This is where you review performance and write commentary that actually helps you run the business.

Day 5 checklist (Review and commentary):

• Review P&L: gross margin, wages, overheads, services income, unusual items
  
• Review balance sheet: bank, VAT, PAYE, supplier creditors, stock, director loans
  
• Produce a simple cash view: what moved cash this month and what is due next
  
• Write commentary: what changed, why, and what needs action
  
• Agree the next actions: ordering discipline, rota changes, claims follow-ups, cost fixes
  

Here’s a very normal example. Wage percentage creeps up for three months. Nothing looks dramatic in a single month, so it gets ignored. Day 5 commentary forces the conversation: is locum usage rising, are pharmacist hours inefficient, are services creating workload without margin, has footfall shifted? Once you see the pattern early, you can fix it calmly.

How do you reconcile NHS income without slowing everything down?

You reconcile NHS income quickly by using a consistent method and sticking to it. The problem is rarely “the NHS is confusing”. The problem is that pharmacies try to treat NHS like retail sales, then wonder why the numbers swing.

Most pharmacies use one of two approaches in monthly management accounts:

• Cash-based: treat NHS as income when it hits the bank, then explain timing differences in commentary.
  
• Accrual-based: use the NHS Schedule of Payments as the backbone, estimate where appropriate, then true-up when final figures arrive.
  

The right method depends on how your pharmacy operates and how volatile your adjustments are. What matters is that it is consistent and transparent.

If your income method changes every month, the accounts stop being comparable. Directors lose trust. And once trust is gone, the numbers get ignored.

How do you keep purchases, supplier statements and rebates under control?

You keep control by doing statement matching every month and treating rebates as a defined policy, not a bonus that appears when it appears.

Supplier statements are your completeness check. They tell you what you really owe and what has been credited. Without them, you can easily understate purchases, miss credits, and get a false sense of margin.

Rebates and retrospective discounts should be handled consistently, usually by:

• tracking them in a simple register
  
• posting them to consistent codes
  
• separating them from core margin if that helps decision-making
  

A typical example: a director negotiates better terms and expects to see improved profitability. But because credits are coded randomly and land in odd months, the benefit is invisible. Once rebates are tracked and posted consistently, the director can see whether buying decisions are improving net cost of goods.

How should stock be handled in a five-day close without guesswork?

You can handle stock credibly without counting every single item every month, as long as you have a method and stick to it.

Practical approaches that work well in pharmacy include:

• cycle counting high-value and fast-moving lines monthly
  
• doing a quarterly full stock count
  
• using a controlled estimate in between, then trueing up at counts
  

The goal is not “perfect stock every month”. The goal is “stock numbers you can rely on enough to run the business”.

A common situation: stock days drift upward slowly. Cash gets tighter. The director assumes profit is falling. In reality, profit might be fine, but cash is sitting on shelves. A month-end close that highlights stock movement and stock days makes the cash story make sense.

Which balance sheet checks make pharmacy management accounts trustworthy?

If you want management accounts you can trust, you need balance sheet discipline. It does not have to be overcomplicated, but it does need to be done.

At minimum, month-end should include:

• bank reconciliation
  
• VAT control check
  
• PAYE and payroll liabilities check
  
• supplier creditors reasonableness check
  
• stock reasonableness check
  
• director loan reconciliation
  

Directors often focus on the profit number, but profit without a clean balance sheet is how errors build quietly until they become expensive.

Authority note: Keeping records tidy during the year also makes statutory reporting smoother with Companies House, and reduces year-end stress.

Which KPIs should a pharmacy director track once the close is working?

Once month-end close is stable, you can track a small set of KPIs that genuinely help you run the pharmacy:

• gross margin percentage and movement drivers
  
• wage percentage and locum ratio
  
• stock days and stock value trend
  
• cash headroom and next 30 to 60 days obligations
  
• creditor days and supplier payment pattern
  
• services income mix and profitability where data allows
  

Each KPI should lead to a decision. If it does not drive a decision, do not track it.

What mistakes slow down pharmacy month-end close again and again?

The same problems show up repeatedly:

• relying on invoices only and skipping supplier statements
  
• missing credits and rebates
  
• treating NHS receipts as “simple sales” without timing logic
  
• ignoring stock for months then suffering at year-end
  
• leaving director spend uncategorised until “later”
  
• waiting for perfect information before moving forward
  

The fix is always the same: a playbook, a cut-off rule, and a clear owner for each task.

How does RX Virtual Finance make this easier with Management Accounts?

RX Virtual Finance LTD supports pharmacy directors by taking month-end from “a chore” to “a system”. That means:

• building the five-day workflow around your pharmacy reality
  
• setting cut-off rules and accrual policies that stop rework
  
• reconciling what matters: NHS, banking, supplier statements, payroll, stock
  
• producing management accounts with consistent commentary
  
• highlighting KPIs that drive margin protection and cash confidence
  

If you want to stop guessing and start managing your pharmacy with numbers you trust, our Management Accounts service is designed for exactly that. We’ll implement the playbook, close the month on time, and give you reporting that supports confident decisions on staffing, buying, services, and tax planning.

FAQs

1) How can I consistently achieve a five-day month-end close in my pharmacy?

You can consistently achieve a five-day close by locking a firm cut-off, collecting the same evidence on Day 1, and running reconciliations in a fixed order for income, suppliers, payroll, and stock. A written accrual rule for late invoices keeps you moving without reopening months, while statement matching and banking checks protect accuracy.

2) How do I stop NHS payment timing from making my monthly results swing?

You stop NHS-driven swings by choosing one consistent treatment and sticking to it every month, either recognising NHS income when cash hits the bank or accruing it using the Schedule of Payments and trueing up later. Consistency makes trends comparable and prevents directors making staffing, buying, or drawings decisions based on distorted timing.

3) How do I reconcile card takings to the bank quickly and with confidence?

You reconcile card takings quickly by matching POS card totals to the card settlement report, then separating settlement timing, refunds, and merchant fees as their own lines. Card providers often settle later and deduct fees automatically, so this method proves whether a difference is timing or posting, rather than “missing sales”.

4) Why do I need to match supplier statements if invoices are already being posted?

You need supplier statement matching because it is the completeness check that catches late invoices, missed credits, rebates, and disputes that invoice-only posting will not reveal. In pharmacy, small missing credits can materially distort gross margin and cash planning, so statement matching is the monthly control that protects the credibility of management accounts.

5) Can I trust my gross margin if I do not do a full stock count every month?

You can trust gross margin without a monthly full count if you use a repeatable stock method, such as monthly cycle counts on high-value lines with a quarterly full count and documented adjustments. Stock is cash on shelves, so the aim is consistent measurement and trend visibility, which keeps margin and cash commentary dependable month to month.

6) How do I stop payroll, locums, and overtime from “surprising” me in management accounts?

You stop payroll surprises by splitting wages into pharmacists, locums, dispensary, and counter staff, then accruing known locum time from rotas when invoices arrive late. This creates a stable wage percentage and locum ratio you can manage, so you can spot drift early and adjust staffing plans before profit or cash is squeezed.

7) How should I manage director drawings each month without creating tax risk?

You should reconcile the director loan account monthly and categorise personal or mixed-use spend immediately, because it directly affects how safely you can draw money. A monthly review keeps the balance sheet clean, supports planning around profit extraction, and reduces unpleasant surprises when year-end accounts and tax calculations are finalised.

8) What should the monthly management accounts commentary always explain for a pharmacy?

Monthly commentary should always explain what moved in gross margin, wages, stock, and cash timing, because those four drivers control pharmacy performance. It should state the cause, reference the evidence source such as statements, payroll reports, or POS data, and finish with specific actions like ordering changes, rota fixes, or credit follow-ups.