Month-end close checklist before the management report

• Every bank account reconciled to the statement at month end, with reconciling items listed and dated.
• Old unpresented cheques and uncleared deposits investigated rather than carried forward.
• Cash in hand counted or confirmed, if the business holds any.

• All goods shipped or services delivered by month end are invoiced in the month — and nothing after it.
• Receipts allocated to invoices, with unallocated amounts listed.
• Customer balances in credit reviewed: advances, duplicates or misposted receipts.
• Doubtful balances reviewed for a provision.

• Supplier invoices for goods and services received in the month are recorded, or accrued if the invoice has not arrived.
• Payments allocated to supplier invoices.
• Major supplier balances agreed to statements.

• Recurring costs not yet billed — utilities, professional fees, interest — accrued.
• Annual payments such as insurance or software spread across the months they cover.
• Payroll for the month fully recorded, including employer taxes and contributions.

• Closing inventory recorded, whether from a count or a perpetual system that has been checked.
• Depreciation for the month posted.
• Additions and disposals recorded in the fixed asset register and the ledger alike.

• Sales tax — GST, VAT or equivalent — ledgers reconciled to the returns being prepared.
• Suspense and clearing accounts cleared, or each balance explained.
• Intercompany or related-party balances agreed with the other side.
• Trial balance balances, and the period is locked against further posting.

The most widely quoted benchmark is APQC’s. Of about 2,300 organisations that answered its general accounting survey, reported by CFO.com in March 2018, the median took 6.4 calendar days to close the month; the quickest quarter took 4.8 days or less, and the slowest quarter 10 days or more. The figures are several years old, so treat them as a range rather than a target.

For a small business the better question is what the close is waiting on. A close that takes a week because supplier invoices arrive late is solved by accruing them; one that takes a week because the report is rebuilt afterwards is solved by not rebuilding it. Whatever the length, the management report follows the close, so every day saved there is a day earlier the report reaches the people who act on it.

Most of a slow close is work that could have been done earlier, or work done again that was already right last month. Five changes take the most days out:

• Reconcile the bank weekly. Month end then has a week of items to clear rather than a month.
• Keep a standing list of accruals and prepayments. The same twenty entries every month should be a list to tick, not a list to remember.
• Set a materiality threshold. Agree in advance which differences are chased before closing and which are noted and carried.
• Close to a calendar everyone can see. Who does what on which working day, so nobody waits to be asked for an invoice or a stock figure.
• Stop rebuilding the report after the close. Once the trial balance is final, the report should be a refresh. With Magic MIS the ledger mapping is kept from the month before, so the workbook, dashboard and commentary come from the closed trial balance in minutes rather than days.