Month-end close checklist

A month-end close is the point at which somebody says the numbers for the month are finished, and stands behind them. Without it, a report is a snapshot of whatever had been entered by the day someone asked.

This list is deliberately generic. It does not cover your tax filings or anything specific to your trade — add those lines yourself, with your accountant. Use it as the skeleton and keep it the same every month; a close gets faster mainly through repetition.

Before the last day

• Set the close calendar and tell everyone the cut-off date for handing in documents.

  A close that waits for the last late invoice has no end date.

• Chase supplier invoices for goods and services already received.

  The cost belongs to the month the goods arrived, not the month the paper did.

• Issue every sales invoice for what was delivered during the month.

  Unbilled deliveries understate revenue now and confuse the customer's balance later.

• Collect petty cash receipts and employee expense claims.

  Small amounts, but left alone they pile up into a year-end problem.

• Schedule the stock count, or the cycle count for this month's locations.

Reconciliations

• Reconcile every bank account and cash box to its statement or count, line by line.

  A difference carried forward 'to look at later' is harder to find every month it survives.

• Reconcile receivables: the customer ledger agrees to the control account, and the ageing report has been read by someone who can act on it.

  The ageing report is a collection list, not an archive.

• Reconcile payables: compare your balances with statements from your main suppliers.

  A supplier statement is the cheapest way to catch a missing or duplicated invoice.

• Reconcile stock: counted quantities against the system, and the stock value against the ledger.

  Investigate a difference before adjusting it. An adjustment hides the cause; it does not remove it.

• Clear suspense and clearing accounts to zero, or list exactly what remains and why.

Review

• Read the manual journal entries for the month, especially the large, the round and the late ones.

  Manual entries go around the controls built into normal documents, so they deserve a second pair of eyes.

• Post accruals for costs incurred but not yet invoiced, and release the share of prepayments that belongs to this month.

  Salaries, rent, utilities and services in progress are the usual ones.

• Check cut-off: documents dated in the first days of next month that belong to this one, and the reverse.

  Cut-off errors rarely change the year, but they make month-to-month comparison meaningless.

• Post depreciation and any other recurring entries.
• Compare the month with last month and with the same month last year, and explain every line that moved more than you expected.

  If you cannot explain a movement, the close is not finished.

A close is not the day the entries stop. It is the day somebody is willing to sign the numbers.

Sign-off and reporting

• Lock the period in the system so nothing can be posted to it afterwards.

  An open period means last month's report can change after the owner has read it.

• Have someone other than the preparer review the reconciliations and sign them.

  In a small team this may be the owner. It still needs to be a second person.

• Produce the same report pack every month: profit and loss, balance sheet, cash position, receivables and payables ageing.

  A fixed pack lets the reader spot change. A different layout every month hides it.

• Write down what held this close up and what will change next month.

  One line is enough. This is how a close gets shorter.

Run the list for a few months without changing it, and note how many working days each close took and which step held it up. The step that repeats is the one to fix — often it is documents arriving late rather than anything in the accounting itself. Once the list is routine, add the lines specific to your business and your filings, and put a name and a date against every line.