Closing the books means making sure everything that happened in the month is recorded, checked and fixed, so the numbers will not move later. Without a close, every report is provisional.
1. Record everything
- All sales invoices and credit notes issued in the month.
- All purchase bills and expense claims received.
- Payroll entries for the month.
- Any loans, investments or capital received.
2. Reconcile
- Every bank account, card and payment wallet against its statement.
- Cash in hand, if you hold any.
- Customer and vendor ledgers, so balances match what each party expects.
- Payment gateway settlements against the sales they relate to.
3. Adjust
- Accrue expenses incurred but not yet billed, such as utilities or professional fees.
- Defer income received in advance for work not yet done.
- Record prepaid expenses and depreciation.
- Clear suspense or unclassified entries.
4. Comply
- Reconcile purchases with what vendors have reported for GST.
- Compute and deposit TDS deducted during the month.
- Prepare the month’s GST returns from the reconciled books.
5. Review
- Compare the month with last month and with budget, and explain big movements.
- Review receivables ageing and follow up overdue amounts.
- Review payables so payments go out on time.
6. Report and lock
- Prepare the profit and loss, balance sheet and cash flow.
- Share the pack with the people who need it.
- Lock the period in your accounting software so it cannot change by accident.
Making it routine
The close gets faster when it happens every month on a fixed calendar and documents arrive on time. FigureWise runs this cycle every month: record and reconcile, comply, review, then close and report.
