The 5-day close executed right. Pre-close discipline, transaction close, full balance sheet reconciliation, analysis with narrative, and reporting that drives decisions — not just compliance.
The balance sheet reconciliation on Day 3 is the most critical step. If the balance sheet isn't reconciled, the P&L can't be trusted. Every account. Every month. No exceptions.
Pre-Close: Throughout the Month 0/8 Ongoing — don't wait until month-end
Reconcile all bank accounts weekly — not monthly. Clear exceptions as they appear. Code and post credit card transactions weekly. Don't let a month of expenses pile up. Reconcile payroll each pay period — gross wages, taxes, benefits, net pay. All should tie. Review AR weekly. Send statements. Follow up on anything past 30 days. Escalate past 60. Enter all vendor invoices as received. Don't hold bills — record the liability immediately. Update WIP / % complete / milestone billing on active projects. Revenue recognition can't wait. Post accruals as they happen — not estimated at month-end. If you know the cost, book it. Review intercompany transactions as they occur. Don't let these pile up across entities.
Pre-Close: By the 25th 0/8 Set yourself up so Day 1 is clean
Bank reconciliations current through the 25th. Any uncleared items older than 30 days investigated. AR aging reviewed — every item over 60 days has a documented plan (call made, payment arrangement, or write-off recommendation). AP aging reviewed — nothing past due without a documented reason. Payment timing optimized (pay on terms, not early). Prepaid expense amortization entries prepared and ready to post. Depreciation entries calculated and ready to post. Loan amortization schedules reviewed — principal and interest split ready for month-end posting. Inventory / WIP schedule reviewed — no stale items. Cost accumulations match project status. Recurring journal entries reviewed for accuracy — don't auto-post without checking.
Day 1-2: Transaction Close 0/10 Get everything recorded
Final bank reconciliation for all accounts through month-end. Zero unexplained items. All last-day transactions entered — deposits, payments, transfers. Nothing pending. Revenue cutoff confirmed — revenue recognized in the period the work was performed, not when invoiced. Expense cutoff confirmed — costs recorded in the period incurred, not when the bill arrives. Post all prepared entries: depreciation, amortization, loan payments, recurring JEs. Reconcile all credit card statements through month-end. Intercompany balances reconciled and elimination entries posted (if applicable). Clear all suspense and holding accounts. Nothing should sit in suspense past the close. Confirm sales tax liability calculated and recorded. Reconcile to returns. Payroll tax reconciliation — YTD payroll per GL ties to YTD payroll reports and 941s.
Day 3: Balance Sheet Reconciliation 0/12 The most important step. Every account. Every month.
Cash accounts — all reconciled to bank statements. Documented. AR subledger ties to GL. Run the aging — total matches the balance sheet to the penny. AP subledger ties to GL. Run the aging — total matches the balance sheet to the penny. Inventory / WIP subledger ties to GL. Detail supports the balance. Prepaids — schedule ties to GL. Amortization is current. Nothing stale. Fixed assets — additions and disposals recorded. Accumulated depreciation is current. Other assets — every line has supporting detail. Nothing in 'Other' without a name. Accrued liabilities — payroll, PTO, bonuses, taxes, insurance all accrued and supported. Notes payable / debt — balances match lender statements. Current portion classified correctly. Equity — retained earnings rolls forward correctly. Draws, distributions, capital all recorded. Trial balance generated. Debits equal credits. No out-of-balance conditions. Month-over-month comparison: investigate anything that changed more than 10%. Document the reason.
Day 4: Analysis and Commentary 0/9 Numbers without narrative are just data
P&L vs. budget: identify every variance over 5%. Get the root cause, not just the number. P&L vs. prior month: identify trends. Is it improving, declining, or volatile? Why? Gross margin by division / product / service line. Are we profitable where we think we are? Revenue per employee trend. Labor cost as % of revenue. Headcount vs. workload. Cash flow statement generated — operating, investing, financing. Does operating cash flow match net income directionally? DSO and DPO calculated. AR and AP velocity — are we collecting faster or slower? Paying too early? Working capital calculated. Trend direction documented. 13-week cash flow forecast refreshed with actuals. Variance from prior forecast noted. KPI dashboard updated — all metrics current, targets compared, flags raised.
Day 5: Reporting and Communication 0/9 Deliver the story, not just the spreadsheet
Financial package assembled: P&L, Balance Sheet, Cash Flow, AR/AP aging, KPIs. Executive summary written: 3 key takeaways in plain language. Lead with what matters. Top 3 variances explained with root causes — not just 'revenue was below budget' but WHY. 3 specific recommendations written. Each one has an owner, a timeline, and a measurable outcome. Cash position and 13-week outlook summarized. Any danger zones flagged clearly. Monthly finance review meeting conducted with CEO/leadership. Not emailed — discussed. Period closed in accounting system. No further entries without documented approval. All reconciliations filed and saved. Audit trail intact. Close calendar updated for next month. Any process improvements logged.