A monthly close is simply a routine: the same steps, in the same order, by the same date, every month. Once it is a habit, reports are ready before the board or management meeting and nobody has to “pull the numbers” under pressure.
Here is the checklist we run. Use it as it is, or trim it to fit a smaller organization.
Before you start
- Pick a close date and put it on the calendar, for example the 10th business day. Hold it.
- Collect statements: every bank, credit card, loan and merchant account for the month.
- Gather payroll reports from your provider and any giving or sales system exports.
- Ask the questions you already know you will have, such as unknown deposits or missing receipts, before close day.
The close, in order
- Enter or import everything that is missing: deposits, bills, payments, payroll journal entries.
- Clear the undeposited funds or payments-to-deposit account so it matches real deposits.
- Reconcile bank accounts first, then credit cards, then loans, then merchant and payroll clearing accounts.
- Review accounts receivable and accounts payable aging. Anything old or odd gets a note or a fix.
- Review the balance sheet line by line. Every balance should be explainable in one sentence.
- Review the Profit & Loss against the budget and last month. Investigate large or unexpected variances.
- For churches and nonprofits: confirm restricted and designated fund balances tie to the detail.
- Post adjustments, then lock the period with a closing date and password.
After the close
- Deliver the standard package: Profit & Loss, Balance Sheet, Cash Flow and a short summary of what changed.
- Add two or three lines leadership actually needs: cash position, any surprises and a decision coming up.
- Save the reconciliation reports and the close checklist with the month’s files.
- Note anything that slowed the close this month and fix the process, not just the entry.
Common reasons a close runs late
Receipts and bills that arrive after the fact, personal expenses on business cards, transfers recorded on one side only, and payroll that is entered as a single lump instead of by account. Each of these is a process problem with a simple fix once it is named.
