A monthly close runs in five phases: cut-off and data collection, reconciliation, adjustments, analytical review, and commentary with delivery. This checklist gives you 32 concrete steps in that order, plus the reason each phase exists, so nothing reaches a client pack before the numbers underneath it are settled.
Download
forecraft-monthly-close-checklist.md is the full checklist as a plain-text file with tick boxes, and fields for period, preparer, and reviewer. Open it in any editor or paste it into your task tool.
Why the order matters
Most close problems come from doing the steps in the wrong order. Writing commentary before reconciliation means explaining a variance that turns out to be a miscoded invoice. Doing the analytical review before adjustments means explaining a cost spike that an accrual would have smoothed. The phases below are ordered so each one only starts once the data it depends on has stopped moving.
The day ranges are a working rhythm for a close finished inside the first eight business days. Adjust them to your engagement.
Phase 1: Cut-off and data collection
Days 1–2. Everything downstream is wrong if the period is still moving underneath you.
- Confirm the period is closed in the accounting system; no further postings.
- Confirm all bank feeds have synced through the last day of the period.
- Confirm all credit card feeds have synced.
- Confirm payroll for the period has been posted.
- Confirm supplier invoices received after period end are dated correctly.
- Confirm customer invoices for work delivered in the period are raised.
- Export the trial balance.
- Export the profit and loss for the period and the prior period.
- Export the balance sheet as at period end.
Phase 2: Reconciliation
Days 2–4. This is where errors are found. Skipping it moves the error into the commentary.
- Reconcile every bank account to its closing statement balance.
- Reconcile every credit card account to its closing statement balance.
- Reconcile the payment processor clearing account (Stripe, PayPal, and similar).
- Agree accounts receivable to the aged receivables report.
- Agree accounts payable to the aged payables report.
- Review and clear the suspense or uncategorized account to zero.
- Confirm intercompany balances agree, if applicable.
- Confirm the balance sheet balances: assets equal liabilities plus equity.
Phase 3: Adjustments
Days 3–5. Matching cost to the period it belongs to is what makes month-to-month comparison meaningful.
- Post accruals for goods or services received but not yet invoiced.
- Post prepayments for costs paid in advance of the period they cover.
- Post depreciation and amortization for the period.
- Review deferred revenue and release the portion earned this period.
- Review provisions (bad debt, holiday pay, bonuses) for reasonableness.
- Reclassify anything sitting in the wrong category.
Phase 4: Analytical review
Days 4–6. The step most often rushed, and the one that produces everything the client actually reads.
- Compare every P&L line against the prior period and list movements above your materiality threshold.
- Compare against budget, if a budget exists.
- Compare against the same month last year, if history exists.
- For each flagged movement, identify the driver: volume, price, timing, one-off, or error.
- Review gross margin percentage against its trend as well as its value.
- Update the cash outlook for the next 13 weeks.
Phase 5: Commentary and delivery
Days 5–8. The pack goes to the client here, and the close ends when it is sent.
- Write the executive summary: what happened, why, and what it means.
- Convert the two or three findings that matter into actions with an owner, a due date, and a next step.
- Reviewer signs off, then release the pack to the client or leadership.
Most close problems come from doing the steps in the wrong order.
Setting a materiality threshold
Step 24 asks you to flag movements above a threshold. A workable rule of thumb for a small-business close is to flag a line when either of these is true:
- the absolute movement exceeds a fixed amount you set per client, or
- the movement exceeds 10 percent of the prior-period figure.
The absolute test catches big movements in small percentage terms; the percentage test catches small movements in categories that are normally stable. Using only one of them misses half the interesting lines. There is worked arithmetic for this in variance analysis examples.
Closing the loop
The step most often missing is the first one of next month: checking what happened to last month’s actions. Open each close with last month’s owners and due dates, so every recommendation is checked a month after it was made. The downloadable file carries a Carry forward section for this.
Running this checklist in Forecraft
Forecraft automates phase 4 and drafts phase 5. It ranks the variances, writes the first draft of the commentary, and records each action with an owner and a due date so it reappears next month. Phases 1 to 3 stay in your accounting system, where they belong.
Related notes
- Free CFO management pack template is the deliverable phase 5 produces.
- How to write monthly financial commentary covers the method behind step 30.
- Variance analysis examples and templates walks through worked arithmetic for phase 4.
- All journal notes