Burkland Brief
- From scramble to system: A monthly close turns accounting into a reliable feedback loop instead of a year-end fire drill.
- Cover the essentials: Cash, AR, AP, inventory/COGS, payroll, overhead, fixed assets, allocations, and variance review.
- Operate with discipline: Use a structured checklist to enforce consistency, accountability, and on-time closes.
- Automate the routine: Modern accounting tools can handle the busywork while your team focuses on accuracy and insight.
- Profit from precision: Better estimates, earlier margin alerts, tighter cash control, and lender-ready financials.
Imagine a monthly snapshot that flags margin leaks, validates pricing, and shows exactly which opportunities fit your cash and capacity. A tight close gives you that and more. With reconciled accounts, timely accruals, and organized workflows, errors surface early, reporting runs smoother, and your team focuses on execution instead of cleanup.
This guide breaks down what a disciplined monthly close looks like: what to review, when to do it, and how to keep the process fast and consistent. You’ll find a full monthly close checklist, best practices for staying organized, and a look at how regular closes sharpen your pricing, cash flow, and profitability.
What is the Monthly Close?
The monthly close is the process of finalizing all accounting activity for the prior month so that your books reflect a true, clean, and reconciled financial picture. That includes reconciling bank and credit card accounts, mapping expenses and revenues to the correct periods, ensuring accruals and deferrals are accounted for, and validating that all subsidiary ledgers (AR, AP, inventory, payroll, etc.) tie into your general ledger.
Done right, the monthly close becomes the heartbeat of your business’s financial discipline. It ensures your decision-making is grounded in accurate, up-to-date data.
A few compelling benefits:
- You catch errors and discrepancies early, while they’re still easily fixable.
- You maintain confidence in your financial statements, rather than “hoping they make sense.”
- You power a fast feedback loop: real margins, real performance, real levers to pull.
- You reduce stress and scramble at quarter-end or year-end.
- You support better project costing, pricing, forecasting, and strategic agility.
And speaking of project costing—according to the Q3 2025 Intuit QuickBooks Small Business Insights survey of ~5,000 small businesses, project costing and price estimates were the most common operational challenge, flagged by more than 1 in 5 (21%) of respondents.
That statistic alone makes a compelling case: if you can build your monthly close into a feedback engine for your projects, you gain a competitive advantage. Because your monthly close enforces accurate mapping of costs (labor, materials, overhead) to time periods, clients, or projects, it becomes the foundation for meaningful project-level financial insight. Over months, you’ll accumulate a history of actual vs estimated costs, letting you:
- Calibrate your pricing and estimating models using real data instead of guesswork.
- Detect margin erosion early on a job and make corrective decisions like scope changes or cost offsets.
- Allocate indirect overhead in smarter, defensible ways.
- Understand which project types or clients tend to overrun and why.
- Present clients with clearer, more defendable proposals and change orders.
- Gain a better hold of your cost accounting policies and implementation.
A disciplined monthly close isn’t only about smooth operations or clean compliance. It’s also a profit engine that turns accurate, timely data into sharper pricing, stronger margins, and better decisions month after month.
High-Level Areas in a Monthly Close
Below are the key domains you’ll want to address (at a high level) in your monthly close:
- Cash, Bank & Credit Card Reconciliations
- Accounts Receivable & Revenue Recognition
- Accounts Payable & Accruals / Deferrals
- Inventory / Cost of Goods Sold (if applicable)
- Payroll & Labor Costs
- Overhead & Allocations
- Prepaid Expenses and Schedules Maintenance
- Fixed Assets & Depreciation / Amortization
- Intercompany / Eliminations (if multiple entities)
- Variance Analysis & Adjusting Entries
- Review, Approval & Closing the Books
- Reporting, Dashboards & Distribution
- Cleanup Tasks / Carry-Forward Items / Suspense Accounts
You can think of it as moving from “raw data” (transactions) → “organized, allocated accounts” → “final statements and insights.”
Monthly Close Checklist for Business Owners
Below is a detailed, step-by-step monthly close checklist you can adopt or adapt. Modern accounting tools can automate much of the routine work, while your team focuses on oversight and exceptions. Delegate as much as possible, and use this as a governance tool to ensure completeness, consistency, and accountability. If you prefer to offload it entirely, Burkland’s outsourced bookkeeping can run the monthly close while you stay focused on growth.
Phase 1: Prepare & Control
- Set posting controls (lock prior periods, open current month)
In your accounting software, close last month so no one can add or change entries dated in that month. This keeps your reported results from shifting after you’ve finished. - Create the close calendar & assign owners
List each task (e.g., bank recs, AR review), the due date (e.g., by the 5th business day), and who’s responsible. One owner per task prevents “I thought you had it.” - Collect statements and reports
Download bank, credit card, and payment processor statements (e.g., Stripe, Square). Pull payroll reports and employee expense reports so every dollar has source documentation. - Pull AR & AP exports
Export your Accounts Receivable (customer invoices and payments) and Accounts Payable (vendor bills and payments) aging reports. You’ll use these to confirm what’s owed to you and what you owe. - Gather payroll/time/contractor data
Get payroll registers, benefits invoices, and approved time sheets or contractor invoices. You’ll record the full cost of labor for the month (wages + taxes + benefits). - Get inventory counts (if applicable)
Do a physical count or cycle count of your products to confirm quantities match your accounting or POS system. Correct any differences before finalizing COGS so your gross margin reflects reality. High-volume operations may not be able to run a full physical count every month. In those cases, a disciplined monthly close, supported by cycle counts and reconciliations, lets you estimate ending inventory with greater confidence and accuracy. - Assemble fixed-asset activity
List equipment or software you bought (over your capitalization threshold), anything you sold or disposed of, and keep receipts. You’ll add these to your asset schedule and record depreciation. - Prepaid expenses and schedule maintenance
Review prepaid expense schedules for items like insurance, software, or annual service contracts. Add any new prepaids, record the current month’s amortization, and confirm ending balances match your general ledger. Keeping this schedule current ensures expenses are recognized in the right months and prevents large, one-time hits to the P&L. - Prepare intercompany schedules (if applicable)
If you have multiple entities, list the amounts due to/from each company so you can clear them. This avoids double-counting revenue or expenses. - Review open items from prior month
Look at suspense/clearing accounts and last month’s “to-fix” list. Decide who will resolve each item and by when so issues don’t linger.
Phase 2: Capture & Reconcile
- Ensure all transactions are entered
Before reconciling, confirm every deposit, card charge, bill, and payment is in the system. Compare your accounting system’s transactions to your statements to spot anything missing. - Reconcile bank, credit, and merchant accounts
Match the ending balance on each statement to your general ledger. Investigate differences like duplicate entries, timing delays, or bank fees you haven’t recorded. Incorrect beginning or ending balances for financial accounts might point at lingering issues that need to be resolved sooner rather than later. - Accounts receivable (AR) review
Make sure all invoices for the month were sent. Apply customer payments to the right invoices. For invoices that are very late, decide whether to record an allowance (expected uncollectible amount) and start collection steps. - Revenue recognition / deferrals
If you invoice ahead of delivering the product/service, record the unearned portion as deferred revenue. Only recognize the revenue you actually earned this month (e.g., services performed, products delivered, monthly subscriptions earned). - Accounts payable (AP) review
Enter all vendor bills you’ve received, even if you haven’t paid them yet. For goods/services you used this month but haven’t been billed for, record an accrual so expenses land in the right month. Move prepaids (e.g., annual insurance) into expense for the month’s share. - Inventory & COGS
Update inventory for purchases and items used or sold. Record any losses (e.g., damaged or missing items). This ensures your Cost of Goods Sold reflects what it actually cost to deliver sales. - Payroll & benefits
Record wages, employer payroll taxes, and benefits for the month. If you owe bonuses or vacation earned but not yet paid, record an accrual so labor costs aren’t understated. If you are holding benefit payments on behalf of your employees, ensure that the correct liability balance is impacted to avoid duplicating/erroneous expenses. - Overhead allocations
Spread shared costs (rent, insurance, software, admin salaries) across departments or projects using a simple, consistent rule (e.g., by headcount or hours worked). This gives you fair, believable margins. - Fixed assets & depreciation
Add new assets to your fixed-asset register, retire old ones, and post this month’s depreciation or amortization. This capitalization process smooths large purchases into monthly expenses and keeps your balance sheet accurate. - Intercompany & eliminations
If entities bill each other, make sure amounts match on both sides. Eliminate internal sales/expenses in any consolidated reporting so you don’t count them twice. - Taxes & compliance accruals
Reconcile sales tax collected vs. owed, payroll tax liabilities, and any use tax. Record the amount due so filing and payment are straightforward. - Debt & interest schedules
Confirm loan balances against lender statements. Record the month’s interest and any fees so your liability and expense are correct.
Phase 3: Review & Adjust
- Trial balance tie-out
Run a trial balance and confirm debits = credits. Scan for oddities (e.g., negative expense accounts, huge swings) and fix before you finalize. - Variance & trend analysis
Compare this month to last month and to budget. If something jumped (e.g., software costs doubled), write a one-line explanation so you remember the “why.” Flux analysis can be a useful tool to complement the month end close process. - KPI/ratio review
Check a few simple metrics: gross margin %, operating margin %, days sales outstanding (DSO), days payables outstanding (DPO), and cash runway. These spotlight cash pressure or margin drift early. - Adjusting journal entries
Post final clean-up entries (accruals, deferrals, reclasses) with a short note and supporting document (invoice, schedule, email). Future-you will thank the present-you. - Cutoff checks
Make sure revenue/expenses land in the correct month. Example: If you shipped on the 31st, it belongs in this month; if you shipped on the 1st, it belongs in next month. - Suspense/clearing accounts
Move amounts out of “ask my accountant’, “miscellaneous”, “uncategorized”, or “to be coded” buckets into the right accounts, or document why they’re pending and assign an owner/date to resolve.
Phase 4: Finalize & Report
- Generate financial statements
Create your Profit & Loss, Balance Sheet, and Cash Flow reports. Do a quick tie-out: AR matches the AR aging, AP matches the AP aging, bank balances match reconciliations. - Management package
Include the statements plus a brief summary: “What changed, why it changed, risks/opportunities, and actions.” Consider adding a simple project or client margin view if relevant. - Review & approvals
Have the owner/finance lead scan the package. If something looks off, fix it now rather than after you’ve shared it widely. - Lock the books
Close the period in your accounting system so no one can change it. This preserves the integrity of your reports. - Distribute reports
Send to stakeholders (partners, lenders, key managers). Highlight 3–5 takeaways and any decisions needed (e.g., price changes, spend reductions). - Archive backups & workpapers
Save statements, reconciliations, schedules, and notes in a dated folder (e.g., “2025-10 Close”). Consistent naming saves hours later.
Phase 5: Act & Improve
- Feed actuals into forecast/rolling budget
Update your cash and revenue outlook using the month’s results so hiring, purchasing, and pricing decisions are current. - Project costing feedback loop
Compare estimated vs. actual labor/materials by project. If a project type consistently runs over, adjust your pricing or scope assumptions. - Log carry-forwards & assign owners
Create a short list of open issues (e.g., “unknown $612 charge”). Assign each to a person with a due date so it’s resolved before next close. - Close retrospective
Spend 10 minutes noting what slowed you down (missing receipts, late approvals). Fix one bottleneck each month to shorten the close. - Compliance follow-ups
Schedule any tax filings or lender packages tied to this month. Add the due dates to your close calendar so nothing slips.
👉 You may choose to stagger certain tasks: for example, inventory and fixed asset steps might be monthly or quarterly, depending on your business complexity.
Tips for Efficiency & Discipline
- Use automation and integrations: connect bank feeds, AP/AR systems, payroll systems, and eliminate manual re-keying.
- Keep a rolling close journal: a living to-do list or board of items that persist from month to month (e.g. suspense accounts).
- Standardize and document workflows so that if someone steps away, the process is repeatable and consistent.
- Assign clear ownership for each area (AP, AR, allocations, etc.), designate who is responsible and when.
- Leverage a monthly close checklist (like the one above) and dashboards to track status in real time.
- Review variances proactively: don’t ignore suspicious lines; early investigation prevents last-minute scrambling.
- Use the close as a feedback loop: feed project / job costing data back into your pricing and estimating models.
- Take advantage of Rules when clearing bank and credit card feeds, this can save hours, however, caution must be exercised not to generalize too much for expenses that can go to different buckets at different times.
Aim to complete the preliminary monthly close within 5 business days. Inventory-heavy or multi-entity businesses may need 7–10 days. This gives you enough time to follow up and close the loop and be ready on time for distribution of the financials to the stakeholders. Moreover, track your actual close time each month and remove bottlenecks to shorten the cycle.
A disciplined monthly close keeps your books organized and your business running with precision. When your financials are accurate, timely, and organized, you gain visibility into where profits are made, where cash is tied up, and where to focus next. It’s one of the simplest ways to run a tighter, more profitable operation.
When closing the books competes with running the business, hand it to Burkland. Our bookkeeping team executes the monthly routine, tightens controls, and delivers decision-ready financials while you focus on growth and customers. Contact us to schedule a brief consult.