Why close at all
An unclosed month is a rumor; a closed month is a fact. Closing means every transaction is recorded, reconciled and locked - so when you read March's P&L in July, it still says what it said in April.
The 90-minute checklist
Reconcile (45 min)
- Bank accounts match the books to the cent
- All customer payments applied to their invoices
- Unallocated receipts investigated (advance? overpayment? mystery?)
- Supplier bills entered and matched to payments
- Tax collected reconciled against sales
Review (30 min)
- P&L: does the margin make sense vs. last month? Chase anything ±15%
- Balance sheet: receivables aging - who is newly overdue?
- Cash: lowest point next month, and the week it lands
- Customer credit balances: anything that should be applied or refunded?
Lock (15 min)
- Fix what review surfaced - this month, not 'sometime'
- Lock the accounting period
- File statements to your close folder
- Note one thing to automate before next close
The compounding payoff
Close #1 takes an afternoon. Close #6 takes an hour. Close #12 is boring - which is exactly what financial control feels like.
What does it actually mean to "close" a month?
Every transaction for that month is recorded, reconciled against the bank, and the period is locked so later edits can’t silently change what already happened - when you read March’s P&L in July, it still says what it said in April.
How long should a monthly close take?
About 90 minutes once it’s a habit: 45 minutes to reconcile, 30 to review the statements against three questions, 15 to fix what surfaced and lock the period. The first close takes far longer - it gets faster every month after.
What should I do if I find an error after locking the period?
Fix what review surfaces during the same close, before locking - that’s the point of the review step. If something is found after locking, it belongs in the next month’s adjustments rather than silently editing a closed period, which destroys trust in every number in that period.
Resources
Was this guide helpful?