Month-End AR Close Checklist

Before you start

A month-end AR close runs far smoother when the groundwork is done before close day. Block out the time, gather your logins and agree the cut-off with whoever raises invoices, so nothing slips between periods.

• Confirm the cut-off date and time with sales and operations, and stop normal invoicing once the period closes.
• Check you can reach the bank feed, the card processor and any payment gateway so receipts are complete.
• Have last month's aged trial balance and reconciliation to hand as your comparison.
• List any known disputes, credits in progress or promised payments so they are not a surprise mid-close.

If your close routinely slips because cash is unapplied, fix that habit first — an unallocated receipt left on the ledger distorts every number that follows.

Step 1 — Lock the cut-off and post all invoices

1. Confirm every invoice for the period has been raised and posted to the sub-ledger.
2. Check goods despatched or work completed near month-end have been billed in the correct period.
3. Park or accrue anything that belongs to the period but cannot yet be invoiced, and note it for review.
4. Stop new postings to the closing period so the ledger stops moving while you reconcile.

Step 2 — Apply receipts and reconcile

1. Import the bank feed and the card and gateway settlements for the full period.
2. Match each receipt to the correct invoice and customer, splitting part-payments where needed.
3. Clear unallocated cash to a real invoice or a customer account before you reconcile — never leave it floating.
4. Reconcile the AR sub-ledger total to the GL control account and chase any difference to its source.
5. Post and reconcile any bad-debt write-offs or credits approved during the period.

Step 3 — Review the aged trial balance and report

1. Run the aged trial balance at the cut-off date and scan the current, 30, 60 and 90-plus buckets.
2. Investigate any balance that has aged a full bucket since last month, and any credit balances on customer accounts.
3. Recalculate days sales outstanding (DSO) and compare it to prior months to spot a collections slowdown.
4. Note expected receipts for next month to feed your cash forecast.

A clean aged report is the backbone of month-end reporting. Our free finance tools can help you sanity-check the numbers, and the guide to getting paid faster explains how to act on what the report shows.

Common mistakes

• Closing before cash is applied. Reconciling with unallocated receipts on the ledger guarantees a difference you will hunt for later.
• Ignoring credit balances. A customer in credit usually means a misapplied receipt or a missing invoice — not a gift.
• Skipping the GL tie-out. If the sub-ledger and control account do not agree, the period is not closed, no matter how tidy the aged report looks.
• Leaving postings open. A period that is not locked can shift after sign-off, breaking your audit trail.