Month End Close for General Contracting

List out the major close tasks such as AP cutoff, AR cutoff, payroll posting, bank reconciliations, WIP updates, and financial statement review. Assign realistic dates for each task based on how long they typically take after month-end.

Share a draft close timeline with the people responsible for related processes (AP clerk, AR/billing, payroll, project managers) and ask for their feedback on what is realistic. Adjust dates where necessary while keeping overall close time reasonable.

Lock in the dates and times for each milestone, including the final date when the accounting period will be locked in the system. Make sure the schedule aligns with any external reporting deadlines, such as lender covenants.

Send an email or memo to all affected staff explaining the close calendar, including cutoffs for approving invoices, submitting timesheets, and processing change orders. Use clear, simple language and include a copy of the calendar.

Upload the calendar to shared folders, project management systems, or office bulletin boards where people can easily reference it. Consider adding reminders to shared calendars for critical cutoff dates.

After each close, note any timing issues and update the calendar for future months. Over time, refine the schedule so it fits the company’s rhythm and resources.

On the AP cutoff date, stop entering invoices with invoice dates in the closing month unless they are clearly part of the prior period and approved for late entry by finance leadership. Mark all later invoices as belonging to the new month.

Check email inboxes, mail trays, and project sites for any invoices that have been received but not yet entered into the system. Enter these into AP and code them to the proper job and cost codes if they belong to the closing month.

Work with project managers and purchasing to identify significant work performed or materials delivered before month-end that have not yet been invoiced. Focus on larger subs and suppliers and any known recurring monthly costs.

For each identified item, estimate the amount based on contracts, purchase orders, or prior invoices. Document your reasoning so it is clear why the accrual amount was chosen.

Post journal entries to accrue these unpaid expenses into the closing month, using appropriate job cost and general ledger accounts. Use a standard accrual account for reversing entries in the next period.

If your system allows, flag accrual entries as reversing so they automatically reverse on the first day of the new month. This prevents double-counting when actual invoices arrive.

On the AR cutoff date, stop creating new invoices dated in the closing month unless they reflect work clearly completed and approved before month-end and have been authorized by finance.

Review the billing calendar and job list to ensure that all planned progress billings, milestone billings, and change order billings for the month have been generated and sent to clients. Follow up with project managers on any missing billings.

Scan the change order log for approved changes that should have been billed during the closing month but were not. Decide with the project manager whether to bill now or accrue as revenue if the contract and accounting policies allow.

For jobs where work has been performed and is measurable but not yet billed, estimate the amount of revenue earned based on percentage-of-completion or other approved methods. Document calculations clearly.

Record journal entries to recognize unbilled revenue and related receivables in the closing month, following company revenue recognition policies. Use separate accounts for unbilled AR to make tracking easier.

After all AR entries are posted, run an AR aging report and compare the total to the AR control account in the general ledger. Investigate and correct any differences.

Check that all payroll periods that end in the closing month have been processed and posted into the accounting system, including any off-cycle runs or corrections.

Compare total gross pay, deductions, employer taxes, and net pay from payroll reports to the payroll-related accounts in the general ledger. Investigate any differences, such as duplicate postings or missing entries.

Review job cost reports for labor to confirm that hours and labor dollars are coded to the correct jobs and cost codes. For non-job labor, ensure it is coded to appropriate overhead accounts.

If the last payroll period extends past month-end or payday is after month-end, accrue wages and employer payroll taxes for days worked in the closing month but not yet paid. Base this on timesheets and usual wage rates.

If benefits such as health insurance or retirement contributions are paid on a different schedule than monthly, accrue a reasonable portion of these costs for the closing month. Document your basis for calculation.

Check that labor burden (payroll taxes, insurance) is being applied correctly according to company policy. If actual costs differ significantly from assumed burden, note whether adjustments are needed in future months.

Download or collect bank statements and credit card statements that cover the entire closing month for all relevant accounts. Ensure you have statements through the last day of the month.

From the accounting system, run detail reports for each bank and credit card account for the period. Verify that beginning balances match prior reconciled statements.

Use your reconciliation tools (spreadsheet or system module) to match each deposit and payment in the bank statements to entries in the general ledger. Mark matched items clearly.

List any transactions that appear on the bank statement but not in the ledger (such as bank fees, interest, or direct debits) and transactions in the ledger not yet on the bank statement (such as outstanding checks). Determine whether new entries or corrections are needed.

Record any missing bank charges, interest, or corrections in the accounting system with clear descriptions. For entry errors, reverse incorrect entries and post them correctly.

Once all differences are explained, complete the reconciliation in the system and save the reconciliation reports and supporting documents in the month-end folder for each account.

Identify which accounts require detailed reconciliation each month, including retention receivable, retention payable, customer deposits, prepaid expenses, loans, and equipment notes payable.

For each selected account, build or update a schedule listing the individual items that make up the balance (for example, by job, by customer, or by loan). Ensure that totals on the schedule match the general ledger balance.

For retention receivable and payable, reconcile schedules to job-specific records such as pay applications and subcontract agreements. Confirm that retention balances by job make sense relative to contract values and billed-to-date amounts.

Compare loan balances and interest expense to lender statements. Confirm that principal and interest amounts are recorded correctly and that any new borrowings or payments are reflected.

For any account where the detailed schedule does not match the ledger or external statements, investigate the cause. Make correcting entries where necessary, with notes explaining the reason.

Place all reconciliation schedules and supporting documents in the month-end close folder, labeled with account names and dates, so they are easy to find during reviews or audits.

Collect the latest job cost, contract value, and forecast final cost information from the job cost review or project managers. Ensure data reflects the position as of month-end.

Using the approved method (for example, cost-to-cost), compute percentage complete by dividing cost incurred to date by forecast final cost. Document the calculation method in your WIP workpaper.

Multiply the total contract value (including approved change orders) by percentage complete to calculate earned revenue to date. Compare earned revenue to billings-to-date to identify under- or over-billings.

Create a WIP report that lists each job, contract value, cost to date, forecast cost, earned revenue, billings to date, under/over-billing, and projected profit or loss. Review for reasonableness and unusual results.

If company policy requires, post journal entries to adjust revenue and WIP based on the WIP calculations (for example, recording under-billing as an asset and over-billing as a liability). Ensure entries are clearly documented.

Share the WIP schedule with project managers and finance leadership for review. Address questions on major swings or unusual jobs before finalizing the report.

Maintain a list of recurring monthly entries such as depreciation, amortization, rent allocations, and insurance expense allocations. At month-end, review this list to confirm which entries should be posted for the current period.

Enter recurring entries into the accounting system using consistent descriptions and reference numbers. Double-check amounts and accounts for each entry, especially if any values change month-to-month.

Update fixed asset and intangible schedules with any new purchases, disposals, or changes. Calculate depreciation and amortization for the month and post the related journal entries, tying them back to the schedules.

If your company allocates certain overhead costs to jobs or divisions, calculate the allocations according to policy and post the entries. Document the basis used (for example, labor hours, revenue).

Post any additional adjustments identified during reconciliations or reviews, such as reclasses between accounts, write-offs, or provisions. For each, include a clear explanation in the journal entry description or in a supporting workpaper.

Run an updated trial balance after all recurring and adjusting entries are posted. Scan for unexpected large balances or negative amounts and investigate anything that looks out of place.

From the accounting system, run an income statement and balance sheet for the closing month and year-to-date. Make sure the reporting period is correct and that all recent entries are included.

Generate supporting reports such as AR aging, AP aging, WIP schedule, job margin summaries, and overhead detail. These help explain what is behind the main financial statements.

Review the financial statements and reports for large swings from prior months, negative balances where they should not be, or accounts with unexpected growth or decline. Make a list of items that need deeper review.

For each unusual item, drill into account or job details to understand what caused the change. Look for miscodings, duplicated entries, or missing entries and correct them where necessary.

After any correcting entries are posted, run the financial statements and key reports again. Verify that previously identified issues are resolved and that the numbers now look reasonable.

Write a brief summary highlighting key points such as revenue and profit vs plan, major job winners or losers, overhead trends, and cash position. This will help leadership quickly grasp the story behind the numbers.

Once preliminary statements are ready, schedule a meeting with owners or senior leaders and, where appropriate, key operations leaders. Share the date early to ensure attendance.

Send the income statement, balance sheet, WIP report, and your commentary summary at least one day before the meeting. Encourage leaders to review and note questions ahead of time.

In the meeting, walk through the commentary, focusing on revenue, margin, overhead, cash, and major job results. Highlight both positive results and areas of concern.

Answer questions from leadership about specific accounts, jobs, or trends. If you do not know an answer, note it and commit to following up with additional detail.

If leadership requests changes such as reclassifications or additional reserves, discuss the accounting impact and decide what to adjust. Make sure changes are grounded in actual activity and policy.

After adjustments are posted, obtain verbal or written confirmation from leadership that the month’s results are approved. Note this in your close checklist and keep any written approvals in the month-end file.

Using your accounting software’s controls, close or lock the month so that new entries with dates in that period cannot be posted without special permissions. Confirm that only authorized finance staff can reopen the period if needed.

Generate the final versions of the income statement, balance sheet, WIP, AR aging, AP aging, and other core reports. Save them as PDFs in a clearly labeled month-end folder.

Ensure all bank reconciliations, balance sheet reconciliations, accrual calculations, WIP workpapers, and journal entry support are filed together. Use a consistent folder and naming structure for each month.

Review your month-end close checklist to confirm every required step has been completed and documented. Check off each item and note any exceptions or items carried forward.

Once the close package is complete, give most users read-only access to the workpapers and restrict editing to a small group in Finance. This preserves the integrity of the documentation.

Ensure the entire month-end package is backed up according to company policy, whether in cloud storage or on secure servers. Verify that you can retrieve these files easily for future reference or audit.