Fractional ControllerA month-end close checklist for a small business

The eleven steps, in order

1. All bank and credit card activity for the month is in the books, with nothing left in the inbox.
2. Every bank and card account is reconciled, which means the books end on the same balance as the statement.
3. Loans and lines of credit are matched to the lender's own statement, with interest kept apart from principal.
4. Payroll entries are matched to the reports from the payroll provider.
5. Sales tax collected is matched to sales, and sales tax paid is matched to the returns.
6. The uncategorized and suspense accounts are cleared, so each item sits in the line where it belongs.
7. Unpaid customer invoices and unpaid bills are aged and checked against what actually happened.
8. Accruals and prepaid items are adjusted, so the month carries its own costs and income.
9. Fixed assets and depreciation are entered for the month.
10. Owner draws and owner contributions sit on their own lines, apart from business expenses.
11. The period is locked, so the month can no longer change by accident.

Why the order matters

You can't check a balance until the activity is in. That's why entering comes first and matching comes second. Cards and banks come before loans because they are the quickest to prove. Adjustments come near the end because they depend on everything before them. The lock comes last, and only then.

If you jump ahead, you end up matching an account that's still changing. You'll think it's right on Tuesday and wrong on Friday.

Run it on my month

Who does which step

The first and sixth steps mostly belong to your bookkeeper, because they're about getting entries made and categorized. Steps two through five, and seven through nine, are where a controller does most of the checking. Step ten is a shared one, since the bookkeeper records draws as they happen and the controller makes sure they landed on the right lines. The last step belongs to the controller alone, because only one person should decide a month is closed.

That split is the point. When the same person enters and then declares the month closed, nobody has really checked anything. Your bookkeeper stays in place, and the checking sits on top.

What happens to an item that can't be settled this month

Sometimes a deposit has no explanation yet, or a bill arrives without a vendor name. The temptation is to drop it into a catch-all account and move on. We don't. It goes on a short open-items list with a note about what's needed to resolve it, and the month is still closed around it. Next month, the list is the first thing checked.

An open-items list is honest. A catch-all account is quiet, and quiet accounts have a way of growing into the uncategorized balance that worries owners.

What each step proves

Matching the bank proves the cash is real. Matching a loan proves the debt is what the lender says it is. Matching payroll proves the wages and the taxes held back agree with the provider. Clearing the suspense account proves nothing is hiding. Adjusting for accruals proves the month shows its own costs. Locking the period proves that what you read today is what you'll read next quarter.

You can read more about the matching steps in the reconciliations a controller checks, and about the adjusting steps in month-end adjustments in plain words.

Ask about an open item

A word on size

The list looks long, and for a small company most steps take minutes. A business with one bank account, no inventory and no loans skips several of them entirely. A business with many accounts spends longer on the matching. The steps stay the same either way. What changes is how long each one takes, and that's why we size the work to your volume.

How long the close takes

That depends on when the statements arrive, when the payroll provider's reports are in, and how quickly receipts and bills reach the bookkeeper. We write the agreed timing into the engagement. You can see the thinking on when a month is really closed.

Checked and closed. Once the list is done, someone new could open the books and find each account matched, each adjustment explained and a short note on what is still waiting. A calendar can end a month by itself, and only the checking closes one.

Talk through the order