The month-end close process for service businesses
Closing the books is the routine of confirming a month's numbers are complete and correct. A repeatable close is the foundation for every report built on top of it. Here are the steps most service businesses follow.
Cut-off and collection
Make sure all invoices for work delivered that month are issued and all bills received are entered. Collect missing receipts. Unbilled work and unentered bills are the most common reasons a close is wrong.
Reconcile and adjust
Reconcile bank, credit card and payroll accounts. Record accruals for expenses incurred but not yet billed, and deferred revenue for payments received ahead of work, if your business uses accrual accounting.
Review and report
Compare the month to prior months and to budget, investigate anything unusual, then lock the period so it does not change later. A short written summary helps owners act on the numbers.
What to check
- A written close checklist with owners and dates
- Whether periods are locked after close
- Accrual versus cash basis
- Who reviews before reports go out
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Frequently asked questions
What is a reasonable close timeline?
It depends on complexity. Many growing businesses aim for roughly 10 business days or less once processes are in place.
Is this finance operations guide advice?
No. Sam's List writes these guides for education. They describe common questions and processes, not advice for your specific situation.
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