Month-End Close Procedures
Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: Controllers, Accounting Staff, CFO
Purpose
Establish a comprehensive month-end close process to ensure accurate, timely financial statements.
Close Calendar
Standard Timeline:
| Day | Activity |
|---|---|
| Last day of month | Cut-off applied |
| +1 | AP cut-off, payroll finalized |
| +3 | All costs posted |
| +5 | Revenue recognized, WIP complete |
| +7 | Preliminary financials |
| +10 | PM review complete |
| +12 | Adjustments finalized |
| +15 | Final financials distributed |
Fast Close (Stretch Goal):
| Day | Activity |
|---|---|
| +3 | Preliminary close |
| +5 | Final close |
| +7 | Distribution |
Pre-Close Checklist
Before Month-End:
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PRE-CLOSE CHECKLIST
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☐ Remind PMs of close deadline
☐ Request PM cost projections
☐ Verify all time submitted
☐ Confirm major deliveries coded
☐ Identify pending invoices
☐ Schedule WIP meetings
☐ Prepare close schedule
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Close Process - Day by Day
Day 1: Cut-Off
Accounts Payable:
- Apply AP cut-off (invoices dated through month-end)
- Accrue known costs without invoices
- Process late invoices to prior period
- Verify subcontractor invoices posted
Accounts Receivable:
- Finalize billing
- Post all pay applications
- Record payments received
- Review AR aging
Payroll:
- Finalize all time entries
- Process payroll
- Post payroll to jobs
- Accrue unbilled time (if applicable)
Day 2-3: Cost Posting
Job Costs:
- All direct labor posted
- All material invoices coded
- All subcontractor costs posted
- Equipment costs allocated
- Overhead allocated (if applicable)
Review:
- Scan for coding errors
- Verify large transactions
- Check for missing costs
Day 4-5: Revenue Recognition
WIP Schedule:
- Update percent complete for all jobs
- Calculate earned revenue
- Determine over/under billings
- Review cost projections
Revenue Entries:
- Book revenue per WIP
- Record over/under billing adjustments
- Verify GM calculations
Day 6-7: Review and Adjustments
Reconciliations:
- Bank reconciliation
- AR reconciliation
- AP reconciliation
- Intercompany (if applicable)
Accruals and Adjustments:
- Review accrual accounts
- Record adjusting entries
- Depreciation
- Prepaid amortization
- Insurance accruals
Day 8-10: PM Review
Each Project Manager Reviews:
- Job costs accurate?
- Percent complete reasonable?
- Projected costs current?
- Change orders included?
- Any issues to report?
Address Questions:
- Investigate discrepancies
- Correct errors
- Document explanations
Day 11-12: Finalize
Final Adjustments:
- Post PM corrections
- Final accrual adjustments
- Management review
- Close period
Quality Check:
- Balance sheet balances
- P&L reasonable
- WIP ties to financials
- Cash ties to bank
Day 13-15: Reporting
Prepare Reports:
- Income statement
- Balance sheet
- Cash flow statement
- WIP schedule
- Project reports
- Variance analysis
Distribution:
- Management team
- Project managers
- Executive team
- Board (if applicable)
WIP Schedule Completion
For Each Project:
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WIP SCHEDULE - PROJECT DETAIL
================================================================
Project: ___________________________________________________
Contract Value:
Original contract: $______________
Approved change orders: $______________
Pending change orders: $______________
Revised contract: $______________
Costs:
Costs to date: $______________
Estimated costs to complete: $______________
Estimated total cost: $______________
Percent Complete:
Method: ☐ Cost-to-cost ☐ Units ☐ Other
Calculation: ______________________________
% Complete: ________%
Revenue:
Earned revenue (contract × %): $______________
Billings to date: $______________
Over/(Under) billing: $______________
Margin:
Estimated gross profit: $______________
Estimated gross margin: ________%
Recognized to date: $______________
Notes:
___________________________________________________________
PM Signature: _______________________ Date: _______________
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WIP Review Meeting:
Attendees: Controller, PM, possibly CFO
Discuss:
- Percent complete methodology
- Cost projection accuracy
- Change order status
- Risk items
- Margin forecast
Account Reconciliations
Required Monthly:
| Account | Reconcile To |
|---|---|
| Cash | Bank statements |
| Accounts receivable | AR aging |
| Retention receivable | Contracts |
| Costs in excess | WIP schedule |
| Fixed assets | Depreciation schedule |
| Accounts payable | AP aging |
| Retention payable | Contracts |
| Billings in excess | WIP schedule |
| Accrued liabilities | Supporting detail |
| Notes payable | Loan statements |
Reconciliation Format:
Account: _____________________ Period: _______________
GL Balance: $______________
Reconciling Items:
+ _________________________ $______________
- _________________________ $______________
Supporting Balance: $______________
Difference: $______________
Prepared By: ___________________ Date: ______________
Reviewed By: ___________________ Date: ______________
Common Close Issues
| Issue | Prevention |
|---|---|
| Missing invoices | AP cut-off communication |
| Incomplete time | Time submission deadline |
| WIP disagreements | Regular PM communication |
| Late adjustments | Firm deadlines |
| Reconciliation gaps | Monthly discipline |
Soft Close vs. Hard Close
Soft Close (Preliminary):
- All major items posted
- WIP substantially complete
- Preliminary financials available
- Adjustments still possible
Hard Close (Final):
- All adjustments posted
- Period locked
- Final financials issued
- No further changes
Close Metrics
Track Monthly:
| Metric | Target |
|---|---|
| Days to preliminary | ≤7 |
| Days to final | ≤15 |
| Adjustments after preliminary | Minimal |
| Reconciliation completion | 100% |
Related Documents
- WIP Reporting
- Financial Reporting
- Job Costing Procedures
- Cash Flow Management
Template provided by support.construction. Timely close enables timely decisions.