What is the month-end close?

A service firm wants to know on the tenth how the previous period went. Revenue, costs and what is still outstanding need to be right. That only works if every invoice has been processed, the bank is up to date and nobody posts anything into that period afterwards.

In practice that is a fixed order: purchase and sales invoices complete, bank transactions processed, open items checked, and corrections made with a journal entry. Then you look at a trial balance to see whether the balances make sense before you close the books.

What goes wrong without a steady rhythm? Figures change afterwards because a late invoice is still posted into an old period. You find out too late that a cost is missing. And the VAT figures drift, because the VAT return leans on a correctly closed period.

Watch a few things. Keep a short list of what must happen each period and who does it. Allow for prepaid amounts and amounts still to come, which you spread across periods. And really lock the period, so that nobody posts into it by accident.

How thorough your close needs to be depends on your business. Agree with your bookkeeper which checks you need. A short look back helps: what took the most time this period, and which mistake already happened last time? Adjust the list accordingly, so that each close runs a little more smoothly than the one before. That makes it a habit rather than a one-off catch-up at the end of the year.