What Is a Monthly Bookkeeping Close?
A monthly bookkeeping close is a repeatable process for reviewing a completed month before relying on its financial reports. The exact steps vary by business, but the process commonly includes reviewing transactions, reconciling accounts, checking balances, and reviewing reports for unexpected activity.
1. Review Bank-Feed Activity
Review downloaded transactions and determine whether each item should be matched to an existing transaction, added as new activity, transferred, or otherwise handled appropriately. Avoid automatically adding everything without review.
2. Address Uncategorized Transactions
Investigate transactions sitting in uncategorized or temporary accounts. Ask for supporting information when the purpose of a transaction cannot be determined from the available records.
3. Review Transfers and Credit-Card Payments
Confirm that money moving between business accounts is recorded as the appropriate transfer or payment rather than duplicated as new income or expense activity.
4. Reconcile Bank Accounts
Compare each applicable bank account with its statement through the statement ending date. Investigate differences rather than forcing a reconciliation to balance.
5. Reconcile Credit-Card Accounts
Complete the same statement-based review for applicable business credit cards. This helps identify missing, duplicate, changed, or uncleared activity.
6. Review Receivables and Payables
If the business tracks accounts receivable or accounts payable, review outstanding balances for items that may have been paid, duplicated, entered incorrectly, or otherwise need follow-up.
7. Review Loan and Liability Activity
Check applicable loan and liability balances and make sure payments are not simply recorded as ordinary expenses when part of the transaction represents a reduction of a liability. Supporting statements or lender documentation may be needed.
8. Review the Profit & Loss
Look for unusual changes, unexpected categories, negative amounts that require explanation, or activity that does not appear reasonable for the month. Compare with prior periods when useful.
9. Review the Balance Sheet
Review asset, liability, and equity balances for items that appear unusual or inconsistent with what is known about the business. The Balance Sheet can reveal issues that are not visible on the Profit and Loss statement.
10. Document Outstanding Questions
Keep a clear list of missing documents, unclear transactions, or items requiring client or professional input. A month should not be treated as fully resolved when important questions remain unanswered.
Why Use the Same Closing Process Every Month?
A repeatable checklist reduces the chance that an important review step is skipped. It also creates a clearer cutoff between completed bookkeeping periods and the current month's activity.
When books are reviewed consistently, financial reports can become more useful for understanding what happened during the month rather than simply serving as records assembled at year-end.
Already Several Months Behind?
If multiple months were never completed or reconciled, the business may need catch-up or cleanup work before a normal monthly close can resume. Carlisle Bookkeeping currently offers qualifying businesses up to six months of eligible catch-up bookkeeping at no additional cost when they begin ongoing monthly bookkeeping services. Eligibility and scope are determined after reviewing the business's bookkeeping needs.
Learn about the Catch-Up Bookkeeping Offer →
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