Build a Foolproof Month-End Close SOP

How to Find Your Month End Close Rhythm

The thing about accounting is that it has a rhythm. Some tasks happen every week, others every month, quarter, or year. When you set up a system around that rhythm, those tasks become faster, smoother, and far less overwhelming. Which is where a solid month-end close process comes in.

This week, we’re diving into how to create a month-end close SOP (Standard Operating Procedure) that’s simple, repeatable, and eliminates headaches.

Why Month-End Close Matters

Every business,  whether you're a Fortune 500 company or a solopreneur, should have a month-end close process. Small businesses especially should review their numbers on a regular basis. Here’s how it helps:

• Spot errors or missing transactions before they become bigger issues

• Keep your reports accurate and up to date

• Get a clear picture of your cash flow and profitability

• Make smarter business decisions

Plus, when you keep up with month-end tasks, year-end (read: tax time) becomes a whole lot easier.

Your Month-End Close Checklist

Here’s a straightforward checklist you can customize for your business:

1. Make sure all the transactions have been recorded. This includes:

   • Sending out invoices for any work that was completed. 

   • Posting/Matching any transactions in the bank feed. 

   • Entering in any bills received.

   • Recording any payments that have been received from clients. 

2. Reconcile your bank and credit card accounts

   • This means verifying that all of the ins and outs from the bank account have been recorded in your accounting software. Reconciliations should be done on a monthly basis using the statement generated from the bank. 

3. Make any adjustments (if necessary)

   • This can mean recording prepaid expenses if using the accrual method. 

   • Record any accountable plan reimbursements for owner expenses (if applicable).

4. Review Reports

   • This is your double check to make sure expense transactions contain the correct payee. 

   • Look at trends for the last three months on the P&L to identify if there are any large discrepancies you were not expecting. 

   • Review accounts payable and receivable aging reports, especially items older than 90 days.

   • Check the reconciliation report for uncleared transactions. If something has been hanging for more than 60 days, investigate whether it’s still valid.

5. Print Reports and file them for later. 

   • Best practice is to save a copy of the reports for your records. This will be helpful if there is ever an issue with your cloud accounting software. 

Create Your SOP

Once you’ve built your checklist, document the process step by step. Include who’s responsible, where the data lives, and any tools you use (like QuickBooks Online, Gusto, or Bill.com).

Even if you’re a solo business owner, writing it out gives you a system you can follow each month without having to recreate the wheel every time. Eventually this document will serve as the training material if/when you are able to delegate this task. 

Final Tip: Set a Close Date

Try closing your books by the 5th or 10th of the following month. Having a consistent deadline builds accountability and creates space to actually review the numbers. Remember that SOP you created, attach the document to a recurring calendar invite to block off the time. 

Need help setting it up or want monthly support? Let’s chat.