Closing Your Books at Month End: Why and How


My first job in the trades was answering the phone and administrative duties at a small family roofing company.  One of those duties was to provide the owner with an overview of money going out and coming in weekly in what he called a “State of the Nation.” 

On Thursday mornings, I would go to the bank to make a deposit and receive the updated account balance (this was pre internet banking).  On a calculator that printed calculations on a small scroll, I would total the bills due that week, the payroll, and the accounts payable (AP) for jobs completed but not collected.   

Finally, I subtracted the expenses from the bank balance and added the AP to generate a forecasted balance.  I then legitimately taped all the little pieces of paper onto a larger piece and added handwritten notes to explain what the numbers meant.  

I preface this article with this information because you must understand I am not an accountant or a bookkeeper, nor do I have any formal financial training.  Thankfully, the owner paid for a bookkeeper who came in once a month and closed our books.  

I didn’t know it then, but while working and managing multiple businesses since, I’ve learned that closing the books every month was one of the best practices we could have implemented. It likely balanced out our arts and crafts attempt at weekly reporting.  

What It Does

“Closing the books” refers to gathering your accounts payable, accounts receivable, and inventory amounts and reconciling them with your actuals (bank accounts, loans, cash, etc).  It generates reports and blocks changes from being made to the financials for that period. 

This isn’t as hard as it may sound. It is a task your bookkeeper or accountant should already be doing at year-end. What we are suggesting is to increase the frequency of closing your books to each month, the benefits of which are:

  • Cleaner records
  • More financial visibility 
  • Better prepared for year-end taxes

The process of closing the books will bring to light unusual numbers that may mean there was a mistake or an omission made.  These issues are easier to account for when they originated within the last month rather than a year prior. 

Additionally, it presents an opportunity for the management team to review the finances on an ongoing basis.  Before your accountant or bookkeeper files the reports away, ask to review them.  

Reviewing reports such as Profit and Loss, Balance Sheets, and Cash Flow Statements may alert you to numbers trending in the wrong direction.  Making changes and implementing solutions to issues discovered in the early months of a year can save you significant amounts of money versus waiting till year-end. 

How To Do It

We couldn’t leave you without some help, so I consulted with the experts on our team and am happy to share their wisdom with you. Here is a step-by-step guide to closing your books at month's end.

1. Backup

a) Backup your QuickBooks

2. Accounts Receivable

a) Verify all ServiceTitan invoices for the month have been batched and posted to QuickBooks.

b) Verify all payments have been applied to ServiceTitan invoices for the month and have been batched and posted to QuickBooks.

c) Compare the ServiceTitan AR Detail by Date to the QuickBooks AR Detail report, Balance Sheet, and General Ledger. Make any changes or adjustments to ensure all records match.

3. Accounts Payable  & Inventory Quantities 

a) If using ServiceTitan Inventory - ensure all POs have been batched and posted.

b) Double-check that all automatic bill payments and any recurring payments have been posted to QuickBooks (for example – loan payments, monthly car insurance payments, etc).

c) Post any outstanding bills to Accounts Payable.

d) Reconcile outstanding vendor bills and statements against the Accounts Payable Reports and Balance Sheet.

4. Monthly Reconciliations
ServiceTitan Reports - Accounting Detail Report; Batch Detail Report QuickBooks - Deposit Detail Report; Register 

a) Reconcile Bank Accounts – Reconcile all bank accounts using the monthly bank statements and monthly credit card merchant statements. Print and file the reconciliation reports and bank statements when finished.

b) Reconcile Loan Balances and Lines of Credit – Reconcile loan balances and lines of credit against your monthly statements. Print and file the reconciliation reports.

c) Reconcile Petty Cash -Reconcile balance with all collected receipts where cash was used. Enter receipts that have yet to be recorded before reconciling.

5. Track/update fixed accounts

a) Record monthly depreciation and amortization (for goodwill, LT liabilities)

6. Prepaid Income and Expenses Adjustments

a) Record monthly journal entries to allocate your prepaid income and expenses.

7. Write Off Bad Debt

a) Option 1: Write off any uncollectible invoices to bad debt payment in ServiceTitan and make sure these invoices have been included in the posted batches. 

b) Option 2: If the invoices are written off to Bad Debt Expense in QuickBooks, record this in ServiceTitan and bypass these invoices so they are not exported to QuickBooks.

c) Mark the customer as “do not service” or handle future work as you see fit

8. Verify all Checks Accounted For
Checks are generated in numerical order. If any check numbers are missing, figure out why and record the missing transactions. If they were voided or deleted, keep a record as to why they were voided or deleted.

9. Review Financial Statements

a) Income Statement

             i) ServiceTitan: No default report (Accounting Detail Report will provide Total Revenue)

             ii) QuickBooks: P&L by Class Report

b) Balance Sheet

            i) QuickBooks: Balance Sheet Report

c) Statement of Cash Flows

             i) ServiceTitan: No default report (Accounting Detail Report will provide Cash Receipts and Net A/R Change)

             ii) QuickBooks: Statement of Cash Flows

d) Look for any unusual balances, missing items, or mistakes. If anything looks or feels “off,” look into it and determine why the balance seems odd. Make any corrections or necessary adjustments.

10. Update Budget
Update the budget and review the budget vs. actual numbers. Determine why some budget amounts are off for the month.

11. Print and File final Financial Statements and Financial Reports from QB
Profit and Loss, Balance Sheet, Trial Balance, and Statement of Cash Flows

12. Close Books (prevent back-dated entries)

a) QuickBooks: Use the “Closing Date” feature. This feature allows for locking the previous month(s) and protects it with a password. This keeps anyone from accidentally changing previous months. The “Closing Date” feature can be found under the company drop-down menu. Any errors found later will require corrections in the current period.

b) ServiceTitan: Update the Minimum Post Date. This should be down 3-5 days before the actual close date for all QuickBooks entries to be performed without disruption for ServiceTitan.

13. Back-Up

a) Backup your QuickBooks

Special thanks to @CHowie and the accounting team for help with the 'How To' guide!



ServiceTitan Certified Provider
ServiceTitan Certified Provider

This is super helpful, @sdrummond! Thanks for sharing the workflow with the Community.💡