Month-end can feel like a chore, especially for small business owners wearing multiple hats. But closing the books isn’t just about tidying up the numbers, it’s your opportunity to get clear, consistent insight into your business performance.
Whether you’re handling your books in-house or working with a bookkeeper, this checklist will help streamline your month-end close and set you up for accurate reporting, smarter decisions, and fewer year-end headaches.
Why an Efficient Month-end Matters
Catch errors early
Spot duplicate transactions, missing entries, or coding mistakes before they snowball.
Improve decision-making
A clean set of books gives you real-time visibility into cash flow, margins, and growth.
Stay compliant
Timely closings help ensure GST/HST filings, payroll remittances, and other obligations are accurate and on time.
The Month-End Close Checklist
Here’s a step-by-step list to follow when closing the books each month:
1. Reconcile Bank and Credit Card Accounts
- Match transactions in your accounting software to bank and credit card statements
- Investigate any discrepancies or unposted items
- Ensure all accounts have a $0 difference by statement end date
Tip: Use bank rules and automation features in your software to speed up reconciliation.
2. Review and Categorize Transactions
- Ensure all income and expenses are coded to the correct GL accounts
- Split any mixed-use or partially deductible expenses (e.g., meals, vehicle use)
- Review classification of transfers, owner draws, or intercompany transactions correctly (typically identified in the reconciliation stage)
Tip: Watch for uncategorized or suspiciously large transactions.
3. Verify Accounts Payable and Receivable
- Reconcile A/P reports with vendor statements
- Follow up on outstanding A/R over 30 days
- Record any bad debt write-offs or credits issued
Tip: Ensure aged receivables and payables tie to the general ledger.
4. Record Payroll and Tax Liabilities
- Post payroll journal entries (including benefits, withholdings, and employer costs)
- Accrue unpaid wages or vacation where applicable
- Reconcile and record GST/HST and PST collected and payable
Tip: Payroll entries should tie to reports from your payroll provider.
5. Review Fixed Assets and Depreciation
- Record purchases or disposals of capital assets
- Post monthly depreciation or amortization entries
- Confirm all assets are correctly classified
Tip: Maintain a fixed asset schedule to stay on top of depreciation.
6. Accrue Expenses and Prepaid Items
- Record accrued expenses (e.g., utilities, interest) not yet invoiced
- Adjust prepaid expenses based on usage (e.g., insurance, software)
Tip: Use recurring journals to automate monthly amortizations.
7. Check Loan Balances and Interest
- Reconcile loan and lease balances to lender statements
- Record monthly interest expense and principal repayments
Tip: Principal and interest should be split in the journal entry.
8. Run Financial Reports and Review for Errors
- Review Profit & Loss, Balance Sheet, and Cash Flow Statement
- Compare to prior months and investigate unusual variances
- Compare to forecast/budget and investigate unusual/significant variances
Tip: Use dashboards to visualize trends and spot anomalies faster.
9. Back Up Your Data and Lock the Period
- Ensure your accounting software has backups enabled
- Lock the books for the month to prevent changes
- Document any key month-end notes for your records
Tip: Locking the period protects the integrity of your financial information.
Bonus: Month-End Review Questions
Once your books are closed, don’t just file the reports away, use them. A few key questions can turn your monthly close into a springboard for smarter decisions.
Ask yourself (or your finance team):
Did revenue increase or decrease from last month? Why?
- Was the change due to seasonality, pricing changes, a large customer order, or lost business?
- Are there revenue trends across products, services, or locations?
- Did any operational changes (e.g. staffing, marketing campaigns, pricing updates) influence sales?
Are gross margins consistent?
- Compare cost of goods sold (COGS) to revenue. Are margins stable?
- If margins are shrinking, is it due to input costs rising, pricing pressure, or operational inefficiencies?
- Have you accounted for all direct costs accurately (e.g. shipping, materials, subcontractors)?
Are there overdue receivables or unpaid bills to follow up on?
- Review the aging report: Which customers are over 30, 60, or 90 days past due?
- Are there vendors you haven’t paid that may affect your credit or supply chain?
- Should you follow up with collection reminders or revise payment terms?
How does cash on hand compare to the previous month?
- Was there a cash drain due to timing of receivables/payables, payroll, tax remittances, or capital purchases?
- Are you maintaining at least 1–2 months of operating expenses in reserve?
- Are you relying too heavily on a line of credit?
Were there any unusual or one-time transactions?
- Large refunds, asset purchases, tax payments, or grants should be flagged and explained.
- Documenting them now helps you avoid confusion at year-end or during reviews.
Do the financials align with your forecasts or budget?
- Compare actuals to your monthly or YTD budget.
- If there are significant variances, note why and whether adjustments are needed for future months.
Financial Health Check
Create a standard month-end Financial Health Summary that includes:
- Key performance metrics (revenue, gross margin, net income, fixed charge coverage)
- Cash balance and runway
- Notable variances or red flags
- Action items for follow-up (collections, expense control, etc.)
Final Thoughts
Closing your books each month might not be the most glamorous task, but it’s one of the most powerful habits a business can build. A consistent, clean, close process helps you make confident decisions, avoid costly errors, and prepare for growth.
If your month-end feels overwhelming or inconsistent, it may be time to revisit your bookkeeping system or get help from professionals who specialize in scalable accounting solutions.
Need support with your monthly close? At Origin Accounting & Advisory, our team of CPAs helps growing businesses build reliable financial foundations with clean books, accurate reporting, and advisory insight. Let’s talk.
