Agree the cut-off and who sends what
List everything that feeds the month: sales, supplier bills, payroll, stock or work-in-progress figures, and who provides each one. Decide the day the month closes and what happens to anything that arrives late. A close timetable works when each person knows what they’re sending and by when. A date in the diary on its own doesn’t get anything done.
Reconcile the main balances
Match bank and card balances to statements. Go through what customers owe and what you owe suppliers. Reconcile payment-platform and payroll balances, and back up any large balance sheet figure with a schedule or a document. Every difference needs a name against it and a reason. It shouldn’t quietly vanish through a journal nobody can explain.
Put costs in the right month
Add accruals for costs you’ve incurred but haven’t been billed for yet, and prepayments for costs you’ve paid that belong to later months. Bring fixed assets and depreciation up to date. Any big estimate needs a clear basis, and should be reversed or corrected once the real figure arrives. How judgement calls are made should be agreed with your accountant.
Send out what you can stand behind
Compare the results with budget, forecast and last month, then explain the changes that affect a decision. Mark any figure that’s still provisional and any input that’s still missing. Note what the review raised and what’s being done about it, so the pack leads to action instead of sitting in a folder.
Example: a building contractor’s profit looks strong for the month because a large supplier bill arrived two days after month end. If the cost belongs to that month, an accrual goes in before anyone relies on the profit figure. When the bill turns up, it’s matched against the accrual and clears it. The aim isn’t to smooth the results. It’s to put the cost in the right month and be clear about any estimate.
Why the close matters
Management accounts are only as good as the close behind them. If the bank isn’t reconciled or a big bill is missing, the profit figure can be out by more than the margin you’re trying to judge. A proper close means you can decide on hiring, pricing or stock with numbers you trust, and spend the meeting on what to do next.
What to check
- Bank and card accounts agree to statements
- Customer, supplier, payroll and platform balances reviewed
- Accruals, prepayments and assets backed up
- Open items and estimates flagged in the pack
- Figures reviewed before anyone acts on them
Where to start
Ask for the close checklist behind the pack: who does what, the reconciliations and the open items. Good management accounts tell you what’s still uncertain, as well as what’s known.