Revenue cut-off traps in Hong Kong trading companies

Trading companies in Hong Kong often recognise revenue when goods leave a third-party warehouse. The warehouse release note, the bill of lading, and the sales invoice can each carry a different date — and only one of them belongs in the period.

During financial close review, we sample late-period invoices against the warehouse release log, not only against the invoice date. Shipments released after midnight on the last day of the month belong in the next period even if the invoice was pre-printed.

Ask the warehouse for a movement report covering T−3 through T+3. Tie each sampled invoice to a release line. Where the release is missing, treat the sale as unsupported until the document appears — do not rely on the sales clerk’s recollection alone.

Intercompany drop-ships add another twist: the Hong Kong entity may invoice a sibling while goods never touch a local warehouse. In those cases, the Incoterms and the on-board bill of lading become the cut-off evidence. Document which source you treat as authoritative before auditors ask the same question twice.