A useful month-end close produces financial records you can explain and use. Start with a checklist that names the owner, supporting records, reviewer, and completion date for each important account.
Agree on the reporting period and responsibilities
Set a close calendar that matches the size and complexity of the business. Collect bank statements, merchant processor reports, payroll records, invoices, and other source documents. Clarify who records transactions and who reviews the results.
A faster close is useful only when the information is dependable. If records are behind, establish an opening balance and resolve the backlog before setting an ambitious reporting deadline.
Reconcile the balances
- Match bank and credit card balances to statements and investigate outstanding items.
- Reconcile receivables and payables to their supporting schedules. Review old or unusual balances.
- Compare payroll and related liabilities with payroll reports and payments.
- Update loan balances, fixed assets, prepaid costs, and other material schedules as applicable.
Review completeness and classification
Check that activity is recorded in the appropriate period under the accounting method used by the business. Review uncategorized transactions, duplicate entries, owner transactions, and large or unusual changes. Document the basis for adjustments and have an appropriate person review them.
Do not force a reconciliation to balance through an unexplained entry. Keep an open-items list with the amount, question, owner, and expected resolution date.
Turn the close into a management conversation
- Prepare an income statement and balance sheet, plus a cash flow view appropriate to the business.
- Compare results with the prior period and budget using consistent definitions.
- Explain material changes with supporting evidence, including timing differences.
- Choose the decisions that need attention and assign follow-up actions.
Keep a repeatable record
Save the completed checklist, reconciliation support, and approved adjustments in an organized location. Record when a period was completed and how later changes are controlled. A simple, consistently maintained process can be more useful than a complicated checklist nobody owns.
General educational information. This guide does not determine the treatment of your particular tax, accounting, or financial situation. Contact us to discuss the facts and applicable requirements.
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