The Monthly Close Checklist Every Small Business Should Run

The Monthly Close Checklist Every Small Business Should Run

A "monthly close" is the process of locking last month's books so the numbers you see are final, accurate, and ready to act on. In most small businesses, it does not happen — or it happens inconsistently, which is almost the same thing.

When a business has no close process, three things go wrong. Financial reports cannot be trusted because the numbers keep changing. Problems that should have been caught in month one go undetected until month four. And year-end becomes a 60-hour forensic exercise because nobody closed anything along the way.

Here is the checklist. Run it every month, ideally within 10 business days of month-end. Adjust the timing once, and then defend it.

Pre-close preparation (last 2 business days of the month)

• Confirm all customer invoices for the month have been issued

• Confirm all vendor bills have been entered in the system

• Remind team members to submit expense reports

• Review outstanding estimates and convert to invoices where work is complete

• Run a preliminary AR aging to identify collection issues before close

Cash accounts

• Reconcile every operating bank account to the bank statement

• Reconcile every savings or reserve account

• Reconcile all credit card accounts

• Reconcile merchant processor accounts (Stripe, Square, Shopify Payments)

• Reconcile payroll clearing accounts

• Investigate and resolve any reconciling items older than 30 days

• Confirm no unauthorized transactions appear on any account

Revenue

• Verify invoices are dated in the correct period (cutoff testing)

• Confirm deferred revenue is properly recorded for prepaid or subscription services

• Reconcile sales platform reports (Shopify, Amazon, Stripe) to the GL

• Record any write-offs for uncollectible AR

• Review revenue by channel or service line for unusual swings

Accounts receivable

• Run AR aging and review balances over 30, 60, and 90 days

• Investigate any credit balances (customer overpayments)

• Apply payments received to the correct invoices

• Document collection efforts for accounts over 60 days

• Calculate or adjust the allowance for doubtful accounts if applicable

Accounts payable

• Run AP aging and review balances over 30 days

• Confirm all bills received are recorded in the correct period

• Record any accrued expenses for services received but not yet billed

• Review and approve any bill payments being processed early

• Investigate any unexpected vendor balances or duplicate bills

Inventory (if applicable)

• Record all inventory receipts and shipments for the month

• Reconcile inventory system to GL inventory accounts

• Investigate any variance greater than your materiality threshold

• Record cost of goods sold based on actual movement

• Record spoilage, damages, or writedowns identified during the month

Payroll

• Reconcile payroll runs to bank withdrawals

• Confirm payroll tax liabilities are recorded correctly

• Accrue unpaid wages for pay periods that straddle month-end

• Accrue bonuses, commissions, or PTO earned but not paid

• Confirm 401(k) and benefits contributions are booked to correct accounts

Fixed assets

• Record any asset purchases over the capitalization threshold

• Record monthly depreciation

• Record disposals of retired assets

• Update fixed asset register

Loans and financing

• Reconcile loan balances to lender statements

• Record monthly interest expense

• Confirm principal payments are separated from interest

• Record any new financing or credit facility activity

Adjusting entries

• Record prepaid expense amortization (insurance, subscriptions, retainers)

• Record any deferred revenue recognition

• Record accruals for recurring expenses not yet invoiced

• Record any reclassifications needed between accounts

• Document the reason for every manual journal entry

Review and lock

• Generate draft P&L and balance sheet

• Compare current month to prior month and same month last year

• Flag any variance greater than 10% or a defined dollar threshold for investigation

• Ensure trial balance balances (debits equal credits)

• Review cash flow statement for anomalies

• Lock the period in the accounting system once close is final

Monthly reporting package

• Profit and loss statement, month and year-to-date

• Balance sheet as of month-end

• Cash flow statement for the month

• AR aging and AP aging

• Budget vs actual variance report (if budget exists)

• Commentary on material variances or unusual items

The mindset that makes it work

A monthly close is not about being an accountant. It is about being honest with yourself every month about what the business actually did.

Most small business owners avoid the close because it feels like administrative overhead. The founders who treat it as a 10-day rhythm — pre-close prep, reconcile, adjust, review, lock — are the ones whose businesses scale without financial surprises. The ones who avoid it end up with a year-end where the cost of truth is far higher than the monthly discipline would have been.

If this list feels overwhelming, that is usually a signal that the business is past what an in-house bookkeeper alone can manage. At about $2 to $5M in revenue, most businesses benefit from an outsourced firm running the close and an internal bookkeeper handling day-to-day transactions.

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*Thryve runs monthly closes for businesses that want their numbers reliable, on time, and actually useful. If your close process is inconsistent or non-existent, a Quick Review shows you what it would take to get it right.*