Transactions may be categorized. The bank feed may be cleared. The Profit and Loss might even look reasonable. But if the accounts haven’t been reconciled and the key balances haven’t been reviewed, the month isn’t actually closed, and those reports may not be ready to base a business decision on.
Everything we’ve covered so far in this series, from job profitability to cash flow, depends on one assumption: that the numbers behind those reports are accurate. This post is where we make sure that assumption actually holds.
Here are seven signs your monthly books aren’t finished, even if everything looks tidy on the surface.
1. Bank and Credit Card Accounts Have Not Been Reconciled
Categorizing transactions tells QuickBooks where to place them. Reconciliation is what confirms the activity in QuickBooks actually agrees with the financial institution’s statement. Without it, the books can still be carrying duplicate transactions, missing expenses or deposits, incorrect amounts, transactions posted to the wrong account, or a beginning balance that’s off. A matching bank feed balance is not proof the account was reconciled correctly.
2. Old Checks, Deposits, or Transfers Are Still Outstanding
A reconciliation can technically balance while unresolved transactions still sit on the books. Old outstanding items might be checks that were never delivered, duplicate payments, deposits posted incorrectly, reissued transactions that were never corrected, entries that should have been voided, or activity recorded in the wrong period. Anything left after the account reconciles should be reviewed and verified. An unusually old item is often a sign the records are incomplete somewhere.
3. Accounts Receivable Does Not Match What Customers Owe
Accounts Receivable should reflect valid customer invoices that are genuinely still unpaid. Watch for customer payments that were never applied to an invoice, credits that have gone unused, duplicate invoices, old balances that aren’t realistically collectible, or unexplained negative customer balances. The total balance isn’t enough on its own. The detail behind it needs to make sense customer by customer.
4. Accounts Payable Is Missing Bills or Contains Old Balances
Accounts Payable should show what the business currently owes vendors and subcontractors. It can be understated when vendor bills haven’t been entered, which means checking email inboxes, vehicles, project folders, and employee desks for anything missing. It can also be overstated when bills were entered twice, vendor credits weren’t applied, payments were recorded incorrectly, old paid bills are still showing as open, or disputed balances were never resolved. A complete close requires confirming the open vendor balances are actually accurate.
5. Payroll, Loan, or Sales Tax Balances Have Not Been Verified
These Balance Sheet accounts get overlooked more often than they should. Payroll liabilities should agree with your payroll reports. Loan balances should agree with the lender’s statement, with principal and interest recorded correctly. Sales tax collected should stay recorded as a liability until it’s actually paid to the taxing authority. If any of these balances are unexplained, negative, or haven’t moved in a long time, the month needs another look.
6. The Balance Sheet Has Not Been Reviewed
Many owners only ever look at the Profit and Loss. That’s not enough. The Balance Sheet is where a lot of incomplete or incorrectly recorded activity becomes visible. Watch for negative balances, suspense or clearing account balances, uncategorized asset balances, owner transactions recorded incorrectly, or anything that just can’t be explained. Every account on that Balance Sheet should represent something the business actually owns, owes, or has invested. If a balance doesn’t make sense, it needs to be investigated.
7. Reports Keep Changing After the Owner Reviews Them
One of the clearest signs that a month wasn’t fully closed is that the reports keep changing after you’ve already reviewed them. This can happen because bills get entered late, customer invoices get added afterward, transactions get recategorized, reconciled activity gets changed, or prior period entries get deleted or moved. Necessary corrections will always happen. But frequent unexplained changes mean the business doesn’t have a clear close date or a protected reporting period. You should know exactly when your reports are ready to review, and why any later changes were made.
What a Reliable Monthly Close Should Give You
A properly closed month should give you confidence that all known activity has been recorded, bank and credit card accounts are reconciled, outstanding transactions have been reviewed, customer and vendor balances are accurate, important liabilities have been verified, every Balance Sheet account can be explained, and reports won’t change without a documented reason.
Categorizing transactions is one step. A monthly close is what actually verifies the activity is complete, the accounts agree with the supporting records, and the balances can be explained. Before you use a month’s numbers to make a decision, make sure that month has actually been closed.
If any of these seven signs sound familiar, you’re not alone, and the fix isn’t complicated once you have a process. Next, we’ll walk through exactly what a reliable month-end close looks like, step by step, so you know what “closed” should actually mean.
