A five-day month-end close for small businesses

Large companies close their books every month because it tells them where they stand. Small businesses benefit even more — you have less margin for surprises. The good news is that a small business close doesn't need a finance department. It needs a routine.

Here's one that fits into the first five working days of the month.

Day 1 — Bank

Reconcile every bank account, credit card and loan account to the statement balance at month-end. Clear or explain every unreconciled item. If the bank doesn't reconcile, nothing else will be reliable.

Day 2 — Money in and money out

• Debtors: review who owes you, how long they've owed it, and who needs a reminder today.
• Creditors: match supplier statements to your records and schedule payments due this month.

Aged debtors is the single most useful report most owners never look at.

Day 3 — Payroll and VAT

• Agree payroll totals to the salary accounts in the ledger.
• Confirm the EMP201 was submitted and paid by the 7th.
• If you're VAT-registered, review input and output VAT for the month so the VAT201 holds no surprises.

Day 4 — Adjustments

Record what the bank doesn't show:

• Accruals for costs incurred but not yet invoiced
• Prepayments spread over the months they relate to (insurance, annual subscriptions)
• Stock movements if you hold inventory
• Depreciation on equipment and vehicles

Day 5 — Review

Produce three reports — income statement, balance sheet and a cash position — and ask:

• Did revenue and margins behave as expected?
• Is anything unusually high or low compared with last month?
• How many weeks of expenses does current cash cover?

Write down the answers. Over a year, those notes become the best management information you have.

Making it stick

The routine works best when the ledger is already current. With bank feeds and receipt capture in a cloud system, days 1 and 2 shrink to an hour each. Without them, catching up takes most of the week.

Want it done for you?

Our Scale package includes monthly management accounts; our Growth package includes monthly bookkeeping and cash flow forecasting. See pricing or read about monthly accounting.