Setting up the monthly close: step-by-step plan and checklist
A monthly close that is correct and runs the same way every month. A step-by-step plan, the mandatory reconciliations and the errors that only surface during the year-end.
The short answer
A good monthly close is a fixed series of checks in a fixed order: completeness first, then reconciliations, then valuation and only after that the reporting. Reverse that order and you are checking figures that are still going to change.
Record per administration who closes the period, on which day that happens and which checks were performed. Those records take a few minutes and prevent December from having to repair the whole year.
Why the monthly close determines the year-end
Every hour you spend during the year-end working out where a difference comes from is an hour that was not spent in one of the twelve monthly closes. Three examples you see in almost every year-end: a VAT liability that does not reconcile with the returns filed, suspense items that sit there for months, and a stock movement without supporting evidence.
All of these items can be resolved in five minutes in the month itself, because the context is still there. Nine months later, someone has to reconstruct the bank, the email and the client's memory.
The plan in eight steps
1. Completeness of the input
Are all purchase invoices, receipts, sales invoices and bank transactions in? Work with a fixed list of recurring costs per client: rent, leasing, insurance, subscriptions. If one is missing for a month, a document is missing.
2. Bank transactions fully processed
Zero unprocessed transactions, not "nearly zero". Every open transaction is a question that comes back later.
3. Accounts receivable and payable
Check for illogical items: negative open invoices, payments without an invoice, invoices outstanding twice. Then look at ageing and flag what the client needs to pick up.
4. VAT position
Reconcile the VAT liability with the returns filed plus the period not yet declared. Differences you see now can still be included in the next return. Differences you only see during the year-end often lead to a correction. See VAT correction (suppletie).
5. Payroll costs
Put the payroll journal entry next to the payroll tax return and next to the payment. These three should reconcile. If they do not, there is a difference in the processing or a correction has not been posted.
6. Balance sheet items with an explanation
Every balance sheet item has a reason to be there. Ask yourself for each one: what does this balance consist of, and does that match the underlying documents? Suspense items, prepaid expenses, accrued income and current account relationships are the items that hold the most noise.
7. Valuation and period allocation
Depreciation posted, provisions updated, costs allocated to the correct period. In monthly figures this is the difference between a usable result and a chart with peaks that mean nothing.
8. Closing and recording
Close the period so that nothing can be posted into it without anyone noticing, and record who closed it and when. That belongs to your control trail, see Audit trail.
Reconciliations that must always be correct
| Reconciliation | Source A | Source B | Common cause of a difference |
|---|---|---|---|
| Bank | Bank ledger account | Bank statement or balance at the bank | An unprocessed transaction or a duplicate entry |
| VAT | VAT liability in the ledger | Returns filed | A correction after filing, or an entry in the wrong period |
| Receivables | Subledger | Ledger | A manual entry made directly on the ledger account |
| Payables | Subledger | Ledger | A payment posted without an invoice |
| Payroll | Payroll journal entry | Payroll tax return and payment | A correction or a net difference |
| Stock | Stock records | Ledger | A movement without supporting evidence |
Fixed checklist
- All recurring costs for this month present.
- Zero unprocessed bank transactions.
- No negative or duplicate open items in receivables and payables.
- The VAT position reconciles with the returns.
- The payroll journal entry reconciles with the return and the payment.
- Suspense accounts empty, or with a noted reason why not.
- Depreciation and period allocations posted.
- Open questions to the client recorded, with a date.
- Period closed, with a name and a date.
- Differences compared with last month briefly explained.
What you automate and what you assess
| Automate | Assess |
|---|---|
| Flagging unprocessed transactions | Whether an open item is an error or a genuine receivable |
| Calculating reconciliation differences | The cause of the difference |
| Preparing recurring journal entries | Whether a provision is still realistic |
| Producing an ageing analysis | Which debtor your client should call |
| Reporting missing recurring costs | Whether a missing document matters this month |
The pattern is always the same: software finds and flags, a person assesses and decides.
Agreements with the client
A monthly close that runs flawlessly on your side still stalls on a client who does not submit their receipts. So make three things explicit: the date by which the client submits everything, what you do if nothing has been submitted (close with a noted exception), and how you ask questions so that the answer ends up with the document rather than in a stray email thread.
From monthly close to year-end
If the months are correct, the year-end is mainly a matter of consolidating, valuing and calculating the tax position. Use the last monthly close of the year as the run-up to the file, see Preparing corporate income tax and Preparing the annual report.
How long a monthly close may take
There is no standard, but there is a pattern: the longer the close takes, the less value the figures have. A result that is only ready halfway through the following month arrives too late for a conversation in which the client can still adjust course.
A workable arrangement is three blocks. The first five working days are for submission and processing, so for the client and the daily flow. Then two to three days for the checks and reconciliations. Finally one day for reporting and the conversation. If an administration structurally overruns, the cause is almost always in the first block, not the second.
Roles and handover
A monthly close only one person can perform is a risk. Two things make the process transferable.
A fixed work instruction per administration with its particularities: which items always need attention, which agreements exist with the client, which exceptions are normal. Half a page is enough, provided it is kept current.
A visible status per administration: submitted, processed, checked, closed, discussed. In a portfolio of dozens of administrations, that status is the only thing preventing panic in the last week about what is still outstanding.
Mistakes that make the close worthless
- Closing without locking the period, so entries are still made later and the figures reported earlier no longer exist.
- Writing differences off to a suspense account to make the close balance, without noting the cause.
- Asking the client questions verbally, so nobody knows later which answer belonged to which item.
- Looking only at the profit and loss account and leaving the balance sheet items untouched, because that is where the noise that delays the year-end sits.
- Using a different order every month, so checks are skipped without anyone noticing.
Next step
See how Administration, Tax and Payroll in Giroo use the same administration, so reconciliations do not have to be made again per module.
Content reviewed: July 2026.