Month-end close checklist for small businesses

The checklist

MONTH-END CLOSE CHECKLIST - [Company] - [Month]

BEFORE YOU START
[ ] Every sales invoice for the month raised and sent
[ ] Every supplier bill and receipt for the month entered
[ ] Bank and card feeds up to date for every account

CASH
[ ] Each bank account reconciled to the month-end statement
[ ] Each credit card reconciled to its statement
[ ] Loan balances agreed to the lender's statements
[ ] Payment processor and other clearing accounts cleared or explained

REVENUE AND RECEIVABLES
[ ] Customer payments matched to their invoices
[ ] Aged receivables reviewed; doubtful balances discussed and provided for
[ ] Revenue earned but not yet invoiced accrued
[ ] Amounts invoiced in advance deferred to the months they cover

COSTS AND PAYABLES
[ ] Supplier payments matched to their bills
[ ] Aged payables agreed to statements from the main suppliers
[ ] Costs incurred but not yet billed accrued
[ ] Prepaid costs released for the month

PAYROLL AND TAXES
[ ] Payroll posted, with employer taxes and benefits
[ ] Sales tax or VAT for the month posted and agreed to its workings

ASSETS AND INVENTORY
[ ] New equipment recorded as assets; depreciation posted
[ ] Inventory counted or agreed to the stock records (if you hold stock)

REVIEW
[ ] Trial balance reviewed: no unexpected balances, nothing left in suspense
[ ] Every balance sheet account agreed to a statement or a schedule
[ ] Profit and loss compared with last month and the budget; large moves explained

LOCK AND REPORT
[ ] Month locked against further posting
[ ] Management report prepared and sent

What does each step of the month-end close involve?

1. Before you start: everything in. The close can only be as complete as what has been entered. Chase missing supplier bills and receipts, raise the last invoices for work delivered in the month, and refresh the bank feeds.
2. Cash: reconcile every account. Xero and QuickBooks Online both have a reconciliation screen for each bank and card account. Match every statement line, and confirm the reconciled balance equals the closing balance on the statement itself, not just that the screen shows nothing left to match. Agree loans to the lender's statements, and clear any account that should net to zero, such as money in transit from a card processor.
3. Revenue and receivables. Match each customer payment to its invoice, then read the aged receivables (Aged Receivables in Xero, A/R Aging in QuickBooks Online). Look hardest at the oldest and the largest balances. On the accrual basis, add revenue earned but not yet invoiced, and defer amounts billed in advance to the months they cover. The receivables aging and days sales outstanding pages explain what to look for.
4. Costs and payables. Match supplier payments to bills and read the aged payables (Aged Payables in Xero, A/P Aging in QuickBooks Online). Agree the balances of your main suppliers to their statements: a bill they have and you do not is a cost missing from the month. Accrue costs you know about whose bills have not arrived, and release the month's share of anything paid in advance, such as annual insurance or software.
5. Payroll and taxes. Post payroll with the employer's taxes and benefits, and check that the payroll liability accounts clear when the payments go out. Post the month's sales tax or VAT and agree it to the workings for the return.
6. Assets and inventory. Record equipment bought in the month as assets rather than expenses, post depreciation, and, if you hold stock, agree the inventory balance to a count or to the stock records.
7. Review. Run the trial balance and look for anything unexpected: a negative balance where there should not be one, an old item in a suspense account, a figure that has not moved when it should have. Agree every balance sheet account to a statement or a schedule. Then compare the profit and loss with last month and the budget, and find the cause of every large movement before anyone else asks. The variance analysis guide covers how.
8. Lock the month. Xero's lock date and QuickBooks Online's closing date stop transactions being posted into a closed month by accident. If a correction is needed later, unlock it deliberately, post the entry, note why, and lock it again.
9. Report. Only now are the numbers ready for the management report. The monthly management report template and how to read a profit and loss statement pick up from here.

Why does a month-end close slip, and what keeps it on track?

• Matching left to month end. Reconcile the bank feeds weekly during the month, and the close starts with most of the work done.
• Late supplier bills. Agree a date for suppliers to send them, and accrue what has not arrived rather than waiting.
• No owner per step. Every line on the checklist needs a name and a target date; a step everyone can do is a step nobody does.
• A reconciliation that nearly balances. An unexplained difference does not fix itself, and it is harder to trace once next month's entries sit on top of it. Find it now.
• Corrections posted into closed months. They change figures that have already been reported. Lock each month, and keep a note of any change made after it was locked.
• A different order every month. Keep the checklist, the owners and the target dates the same, so the close becomes routine and any delay is visible.

Or have it written for you

• Your ledger. QuickBooks Online and Xero; NetSuite, Sage Intacct, Zoho Books and Business Central in beta.
• Every month on the 1st. The report is refreshed on the 1st of every month for the month just ended, as a draft that waits for your approval.
• History from day one. The first connection reads the trailing 24 months, so the first report already compares each month with the same month last year.
• Cash, 13 weeks out. A weekly cash forecast beside the open invoices and bills falling due.
• A second reviewer. A second, independent AI reviewer reads every monthly narrative, and an AI explanation that cites a source outside your books is discarded, not published.