At many SMEs, "closing the month" means sending a folder of documents to the accountant and waiting. Then come the questions, the missing items, the requests for clarification, and the month ends up closed halfway through the next one — by which point it is no longer useful for deciding anything.
A close that is actually useful for management has to be done by the 5th. For that, most of the work is not accounting: it is operational, and it belongs to the company.
What has to be done before talking to the accountant
- All of the month's invoicing issued. No exceptions pending confirmation. Whatever cannot be invoiced has to be recorded as such, with the reason.
- All purchases recorded, including the ones that arrived by email to one person and never made it into the shared folder.
- Bank accounts reconciled through the last day of the month.
- Employee expenses submitted and approved. This is the line item that most often turns up two months late.
- Documentation organised the same way, every single month.
Order matters
The sequence that avoids rework is this: close invoicing first, then purchases, then the bank reconciliation, and only at the end produce the numbers for management. Doing the reconciliation before everything is recorded means doing it twice.
In practice, with the work spread across the month, closing takes between half a day and one business day. It only turns into an ordeal when everything piles up into the last two days.
Reconciliation is weekly, not monthly
Reconciling a bank account at month end means tracking down the source of thirty-day-old transactions. Reconciling every week means tracking down seven-day-old transactions that someone still remembers. Total time is lower, and the number of open questions is far smaller.
It is also the only way to notice in time that an expected payment never came in — information that, at month end, already arrives too late to act on.
What management should receive on the 5th
Not a trial balance. A trial balance answers legal obligations, not management questions. What a management team needs to see is four things:
- How much came in and how much went out, and the real balance available once committed amounts are accounted for.
- How much is outstanding, and how much of that is already overdue.
- How much is due in the next 30 days, including salaries, social security and VAT.
- How this compares with the previous month.
The test
If you can answer, on the 5th, "how much money does the company genuinely have free right now," the close is working. If answering means calling someone and waiting, what exists is a document handover, not a close.