Month-End Close Checklist for Accounts Payable

The month-end close can be stressful. This comprehensive checklist ensures you don’t miss anything and helps you close AP accurately and on time.

Before Close: Preparation (Day -3 to -1)

Communicate Deadlines

• [ ] Email all approvers about invoice approval cutoff
• [ ] Remind departments about accrual needs
• [ ] Notify vendors of any submission deadlines
• [ ] Alert purchasing about any pending POs that should be closed

Invoice Cleanup

• [ ] Process all invoices received through the day before close
• [ ] Clear exceptions and holds that can be resolved
• [ ] Document exceptions that will carry forward with reasons
• [ ] Follow up on invoices stuck in approval

Preliminary Review

• [ ] Run preliminary AP aging report
• [ ] Identify any unusual items for investigation
• [ ] Check for large or unexpected payables
• [ ] Verify high-value invoices have proper documentation

Close Day: Core Tasks

1. Cut Off Invoice Processing

• [ ] Stop processing new invoices (or flag as next period)
• [ ] Ensure all invoices dated current month are entered
• [ ] Verify no future-dated invoices are included
• [ ] Document any invoices received but dated next month

2. Clear Open Receiving

• [ ] Review open receipts (goods received, not yet invoiced)
• [ ] Determine if accrual is needed for significant items
• [ ] Close out or adjust receiving documents as needed
• [ ] Match any outstanding receipts to late-arriving invoices

3. Process Accruals

For goods/services received without invoices:

• [ ] Identify items requiring accrual
• [ ] Calculate accrual amounts (use best estimate)
• [ ] Enter accrual journal entries
• [ ] Document accrual basis and calculations

Common accruals: - [ ] Utilities (estimate based on prior months) - [ ] Professional services in progress - [ ] Goods in transit - [ ] Recurring services not yet billed - [ ] Commissions or bonuses

4. Finalize Payments

• [ ] Complete all payments for the period
• [ ] Verify payment dates are within the close period
• [ ] Record any manual or emergency payments
• [ ] Document any payments on hold with reasons

5. Reconcile AP Subledger to GL

• [ ] Run AP aging report as of close date
• [ ] Run AP control account from GL
• [ ] Compare totals and investigate differences
• [ ] Document reconciliation and any adjustments

Common reconciliation differences: - Timing differences (payment cut today vs. GL tomorrow) - Unapplied credits - Misposted transactions - Uncleared checks

6. Review Aging

• [ ] Review items over 90 days for issues
• [ ] Investigate items on hold
• [ ] Verify nothing is “stuck” in the system
• [ ] Document reason for any old items

7. Complete Expense Accruals

• [ ] Review prepaid expense amortization
• [ ] Accrue any unbilled recurring expenses
• [ ] Review expense account balances for reasonableness
• [ ] Document any unusual items

Quality Review

Account Analysis

• [ ] Compare current month expense accounts to prior months
• [ ] Investigate significant variances (>10% or >$X)
• [ ] Document explanations for variances
• [ ] Verify coding accuracy on large items

Documentation

• [ ] Ensure all invoices have proper support
• [ ] Verify approvals are documented
• [ ] Confirm PO matching where required
• [ ] File/attach all close-related documentation

Exception Handling

• [ ] Disputed invoices documented and tracked
• [ ] Vendor credit memos applied correctly
• [ ] Returned goods reflected in payables
• [ ] Pricing discrepancies resolved or accrued

Reports to Generate

For Your Records

• [ ] AP Aging Report (detail by vendor)
• [ ] AP Aging Summary
• [ ] Open PO Report
• [ ] Accrual Journal Entries
• [ ] AP to GL Reconciliation

For Management/Close Package

• [ ] AP Summary by category/department
• [ ] Cash requirements forecast
• [ ] Aging summary (current, 30, 60, 90+)
• [ ] Vendor payment analysis
• [ ] Accrual summary with explanations

For Audit Trail

• [ ] Invoice register for the period
• [ ] Payment register for the period
• [ ] Manual journal entries with support
• [ ] Reconciliation workpapers

Period Cutoff Controls

Invoice Cutoff

Payment Cutoff

Accrual Guidelines

When to Accrue

Accrue if: - Goods or services received during the month - Invoice not yet received - Amount is reasonably estimable - Amount is material to your business

How to Estimate

Accrual Entry

Debit: Expense Account
Credit: Accrued Expenses (or AP-Accrued)

Next month: Reverse the accrual, then book actual invoice.

Common Close Issues and Solutions

Issue: Invoice Received After Close

If material: - Book accrual for estimated amount - Document that invoice arrived late

If immaterial: - Process in next period - Note for file

Issue: Approval Not Received

Options: - Escalate for emergency approval - Hold invoice for next period - Accrue if services were clearly received

Issue: PO Doesn’t Match Invoice

Before close: - Resolve discrepancy with purchasing - Adjust PO or invoice as appropriate

At close: - Book at lower of invoice or PO - Accrue difference if invoice likely correct - Document for follow-up

Issue: Vendor Statement Doesn’t Agree

• Reconcile statement to your records
• Identify missing invoices (request copies)
• Identify duplicate payments
• Document reconciliation

Close Timeline Template

Day -3: Preparation

• Send deadline reminders
• Preliminary aging review
• Clear backlog items

Day -2: Push for Approvals

• Escalate pending approvals
• Identify accrual needs
• Complete invoice entry

Day -1: Final Entry

• Last invoice entries
• Begin receiving analysis
• Prepare accrual calculations

Day 0: Close Day

• Morning: Stop invoice processing
• Morning: Calculate and enter accruals
• Afternoon: Run aging and reconciliations
• Afternoon: Investigate differences

Day +1: Review and Finalize

• Complete reconciliation
• Generate reports
• Document any issues
• Submit close package

Key Metrics to Track

Key Takeaways

• Communicate deadlines early—approval delays kill close timelines
• Cutoff is critical—be consistent about what’s in and out
• Accruals ensure accurate financials even without invoices
• Reconcile AP subledger to GL every month
• Document everything for audit trail and future reference
• Learn from post-close adjustments to improve next month

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