Why the order matters
Most closes are slow not because any single task is hard but because they are done in the wrong sequence. Anything that changes a balance has to happen before the thing that reads it, or the work gets done twice. The sequence below is arranged so nothing has to be revisited.
The sequence
Cut off
Decide what belongs in the period before entering anything. Goods received but not invoiced, work delivered but not billed, and costs paid in advance all belong to the period they relate to rather than the period the paperwork arrived.
Bank and card reconciliation
Every account, to the statement, with no stale uncleared items carried forward without explanation. Nothing downstream is reliable until this is done.
Sales and receivables
Everything delivered is invoiced, credits are raised, and the receivables ledger agrees with the control account. Age the debt while you are here.
Purchases and payables
Everything received is recorded, supplier statements are agreed, and the payables ledger agrees with the control account.
Stock
Counted or rolled forward on a consistent basis, with the difference between the count and the ledger recorded as its own line rather than absorbed into cost of sales.
Payroll
Posted in full, including employer costs and anything accrued but not paid, and agreed to the payroll reports.
Prepayments, accruals and depreciation
The recurring journals, run in the same form every month so the comparison between months means something.
Review the trial balance
Look for the accounts that should be empty and are not, balances with the wrong sign, and anything that moved more than you expected.
Produce and read the statements
Produced is not the point. Somebody has to read them against last month and against the plan, and ask about the three largest movements.
Lock the period
Close it in the software so it cannot be edited by accident. A period that stays open will be changed, and the figures you reported will stop agreeing with the system.
What makes a close repeatable
- A fixed date each month, treated as a commitment rather than an intention
- The same person or role owning each step, written down
- The same report format every month, so a change stands out
- Estimates where a document has not arrived, corrected next month, rather than a close that waits
- A short note of anything unusual, written while it is fresh
A close that takes longer each month is telling you something. The cause is almost always upstream: records arriving late, in a different form each time, or from somebody who does not know what is needed.
Where this applies
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