Month end close: getting the books shut in days rather than weeks

The month end close is the routine that takes a month's transactions and turns them into figures somebody can rely on: everything recorded, everything reconciled, everything reviewed, and the period locked. In a small company it is usually done by one person, in gaps between other work, and it takes far longer than the work itself justifies.

That gap is worth understanding, because it is not an accounting problem. Almost all of it is waiting — for a supplier invoice that has not arrived, for an expense claim nobody submitted, for an approval, for a bank statement. The close is a dependency chain, and the way to shorten it is to attack the dependencies rather than to work faster at the end.

What a close actually involves

• Cut-off: agreeing what belongs in the period and what does not, and applying it consistently.
• Completeness of income: all invoices raised, all sales recorded, anything delivered but not yet invoiced identified.
• Completeness of costs: supplier invoices in, accruals for what has been received but not invoiced, prepayments for what has been paid in advance.
• Expenses and cards: claims submitted, card transactions coded, receipts attached.
• Bank reconciliation for every account with a statement.
• Payroll posted, including tax and any accruals for untaken holiday if you record it.
• Balance-sheet review: does every balance still make sense, and can you explain each one.
• Review of the profit and loss against the prior month and against expectations, with a written explanation of anything unusual.
• Locking the period so nobody edits a closed month.
• The reporting pack, and a short commentary saying what the numbers mean.

The balance-sheet review is the step small companies skip and the one that catches real errors. Take each balance in turn and ask what it consists of: this bank balance matches the statement, this receivables figure is these six invoices, this liability is that loan. Anything you cannot explain in a sentence is either a mistake or something you have stopped understanding — and it is much cheaper to find in month three than at year end.

Shortening it

1. Write the close as a checklist with an owner and a target day per task. Most closes have never been written down, which is why they take a different length each month.
2. Move work earlier: code invoices as they arrive, reconcile the bank weekly, chase expense claims before month end rather than after.
3. Publish a deadline for expense claims and supplier invoices — a few working days before close — and hold it. Late items go into the next period unless they are material.
4. Use standing accruals for the costs that always arrive late, so a missing invoice does not stop the close.
5. Automate the mechanical parts: recurring journal entries, bank import, categorisation rules.
6. Do not wait for perfection on immaterial items. Set a threshold below which you accrue an estimate and move on.
7. Track how long each step takes for a couple of months. The bottleneck is rarely where people assume.
8. Lock the period once closed, and mean it. Reopening a closed month invalidates everything downstream.
9. Review the checklist quarterly and delete steps that never find anything.

Fast is a means, not the goal

A five-day close is worth having because it means decisions are made on current numbers rather than on six-week-old ones. It is not worth having if it is achieved by skipping the reconciliations and the balance review, which is how closes become fast and wrong at the same time. The order to improve in is: correct first, then explainable, then fast. A company that closes in twelve days with a clean balance-sheet review is in better shape than one that closes in four and discovers problems at year end.

The checklist itself works well on a board in Ettex Board: columns and cards with drag-and-drop for each close task, assignees so every step has an owner, due dates against your target days, checklists inside cards for the per-account reconciliation list, and lists or swimlanes if you close several entities. Every move is logged per card, which gives you the timing data to find the bottleneck. The accounting happens in Ettex Books — chart of accounts, double-entry journals, recurring entries, bank statement import from CSV or OFX with reconciliation, attachments on any entry and P&L, balance sheet and ledger export — while expense claims arrive through Ettex Forms, the reporting pack is written in Ettex Docs and the variance analysis sits in Ettex Sheets.

Plainly: Ettex has no close-management module. There is no close calendar, no task automation, no automatic accrual generation, no flux analysis, no period-lock enforcement workflow and no sign-off trail beyond what you record yourself. The board tracks tasks and Books holds the ledger; the discipline of the checklist is yours. For multi-entity consolidation on a tight timetable, close-management software exists for a reason.

Why closes drag

• No written checklist, so the close is reconstructed from memory each month.
• Coding and reconciliation left entirely to the close instead of done weekly.
• No deadline for expense claims and supplier invoices, so the close waits on other people indefinitely.
• Chasing immaterial items instead of accruing an estimate.
• Balance-sheet review skipped, which defers errors to year end.
• Periods never locked, so figures change after they have been reported.
• One person holding the whole process with no documentation, which makes their holiday a crisis.
• Speed pursued before accuracy, producing numbers nobody trusts.

The month end close is a dependency chain, not an accounting exercise. Write the checklist, move coding and reconciliation earlier, set a deadline for claims and invoices, review the balance sheet — and lock the period when it is done.