The month-end close: a checklist

What a good close gives you

A close is finished when the numbers are complete, reconciled and reviewed, and someone could defend every balance on the trial balance. Most small companies in the Kingdom close late or not at all, then rebuild the year in a rush before the zakat or tax return. A steady monthly close costs less and catches problems while they are still small.

Days 1 to 3: capture everything

• Record every sales invoice issued in the month, and check them against the e-invoicing records.
• Record every supplier invoice received, and chase the ones you know are missing.
• Post payroll from Mudad, with GOSI contributions and any end-of-service and leave accruals.
• Record petty cash and employee expense claims with their receipts.
• Accrue costs for goods and services received but not yet invoiced.

Days 3 to 5: reconcile

• Bank accounts, line by line against the statements, with every reconciling item explained.
• Customer balances against the receivables ledger, with an ageing report and follow-up on overdue amounts.
• Supplier balances against statements where suppliers send them.
• VAT accounts: output VAT on sales and input VAT on purchases, ready for the return.
• Prepayments, accruals and fixed assets, with the month’s depreciation posted.
• Balances with related companies, agreed with the other side.

Days 5 to 7: review and report

• Trial balance review: no suspense balances, no unexplained movements.
• Profit and loss and balance sheet compared with last month and with budget, and every large variance explained.
• Cash position and a short cash forecast for the coming weeks.
• A one-page summary for management: what happened, what needs a decision.
• The period locked in the accounting system, so nothing is posted into it afterwards.

Signs your close needs work

• The bank reconciliation has items older than a month.
• Nobody can say what is in the suspense or “other” accounts.
• The VAT return is prepared from a separate spreadsheet that does not match the books.
• Management sees the numbers more than three weeks after the month ends.
• Year-end adjustments are large every year.

How we run it

We run the close to a fixed calendar each month, keep the reconciliations on file, and send a short management report with the numbers and what they mean. When the year ends, the books are already in order for the auditors and for the zakat or tax return.