1) Module HUD

  • Module #: 10 / 13
  • Time: 25–35 min
  • Outcome: “After this, you can run a contractor-friendly monthly close in QBO: reconcile accounts, lock obvious errors, and trust your Profit and Loss enough to make decisions.”
  • Prereqs: [Module 4 — Bank Feeds] + (recommended) [Module 9 — Enhanced Job Costing & Profit Reporting]
  • Stop here if: you only need to reconcile the bank and produce basic monthly financials (no job reporting cadence yet).
  • Level tags used in this module: ✅ Baseline / 🛠️ Operator Upgrade / ⚠️ Advanced

2) Answer Box (snippet block)

  • What it is (2 lines)
    Monthly close is a repeatable checklist that turns “live bookkeeping” into finalized monthly numbers.
    It’s how you stop debating your reports and start using them.
  • When to use it (2–4 bullets)
    • Every month (yes, even slow months)
    • You’re preparing for taxes, lending, or job reviews
    • Your Profit and Loss changes when you refresh it (bad sign)
    • You want fewer surprises and fewer cleanups
  • The common mistakeS (1-2 line)
    Never closing, then trying to fix 6 months in one weekend. That’s not accounting. That’s archaeology.
  • The fixES (1-2 line)
    Close monthly: reconcile, review exceptions, fix the top problems, then lock the month.

3) The mental model (keep short)

  • Close = reconcile cash + validate A/R + validate A/P + sanity-check categories.
  • Your goal is “decision-grade,” not perfect.
  • Fix high-impact errors first: duplicates, uncategorized, missing job assignment, negative balances.
  • If the Balance Sheet is wrong, the Profit and Loss is usually lying too.
  • Closing monthly prevents “cleanup debt” from compounding.

4) Do this in QBO (step-by-step)

✅ Baseline monthly close (do these every month)

  1. Pick the month you’re closing (example: last month)
  2. Reconcile bank accounts:
    • Go to Accounting → Reconcile
    • Select your bank account
    • Enter statement ending date + ending balance
    • Check off transactions until the difference is $0
    • Finish the reconciliation
  3. Reconcile credit cards:
    • Accounting → Reconcile
    • Select each credit card
    • Match the statement exactly
  4. Clear Undeposited Funds (if you use it):
    • Go to Reports
    • Run a report that shows the balance (your goal: it should make sense and not be ancient)
    • If it’s bloated, go to + New → Bank deposit and clear the backlog properly
  5. Review Uncategorized / “Ask My Accountant”:
    • Go to Reports → run Profit and Loss for the month
    • Click into Uncategorized lines and recode the big stuff first
  6. Review A/R:
    • Go to Reports → Accounts Receivable Aging Summary
    • Verify the list matches who actually owes you
    • Fix obvious misapplied payments
  7. Review A/P:
    • Go to Reports → Accounts Payable Aging Summary
    • Verify open bills match reality
    • Fix duplicates or bills coded to the wrong vendor/job
  8. Run final Profit and Loss:
    • Go to Reports → Profit and Loss
    • Month = the month you’re closing
    • Click Run report
  9. Run final Balance Sheet:
    • Go to Reports → Balance Sheet
    • Date = last day of the month
    • Click Run report

Stop here marker (Baseline):
If bank/credit cards reconcile, A/R and A/P make sense, and Profit and Loss feels believable, stop.

Pro tip: Close doesn’t mean “no changes ever.” It means “no random changes without a reason.”

🛠️ Operator Upgrade (adds job integrity checks)

  1. If you use jobs, run:
  • Project Profitability Summary for the closed month
  1. Fix the top job report errors:
  • Jobs with revenue and no costs
  • Jobs with costs and no revenue
  • Big unassigned costs
  1. Re-run Project Profitability Summary after fixes

Stop here marker (Operator Upgrade):
If job reports are believable and exceptions are minimal, stop.

⚠️ Advanced (tighten controls)

  1. Turn on close controls (if you’re ready):
  • Go to Settings ⚙️ → Account and settings → Advanced
  • Use the “close the books” control (if you have multiple users or recurring mistakes)
  1. Set a close date for the month you finalized
  2. Document any exceptions (short notes): what changed and why

Warning: Don’t lock the books if you still “fix by guessing.” Locking bad data just makes it harder to fix later.

5) Real-world example (mandatory)

You close January.

  • Bank statement shows $18,420.55 ending balance
  • Your QBO reconciliation is off by $310
    You find:
  • A vendor bill was entered twice (one bill + one Banking Add)
    Fix:
  • Delete/recode the duplicate
  • Reconcile again → difference = $0
    Now your Profit and Loss drops by $310 (and becomes more true). That’s the entire point of close.

6) Run this report now (mandatory checkpoint)

  • Report name: Balance Sheet
  • Filters/settings:
    • Go to Reports → Balance Sheet
    • Date = last day of the month you closed
    • Click Run report
  • What “good” looks like:
    • Bank balances match reconciled statement balances
    • A/R and A/P balances make sense (not negative without a real reason)
    • No weird “suspense” accounts growing unnoticed
  • What “broken” looks like:
    • Bank balances don’t match statements (not reconciled)
    • A/R is negative (usually misapplied payments/credits)
    • A/P is negative (usually bill/payment mess)
  • One fix if broken:
    • Re-run Accounting → Reconcile for the account that’s off and fix the missing/duplicate transaction.

7) Lab (do it on your file)

  • [PASS/FAIL] You reconciled checking in Accounting → Reconcile
  • [PASS/FAIL] You reconciled all credit cards in Accounting → Reconcile
  • [PASS/FAIL] You cleared or validated Undeposited Funds activity
  • [PASS/FAIL] You ran Accounts Receivable Aging Summary and it matches reality
  • [PASS/FAIL] You ran Accounts Payable Aging Summary and it matches reality
  • [PASS/FAIL] You reduced Uncategorized / “Ask My Accountant” to near-zero
  • [PASS/FAIL] You ran final Profit and Loss and Balance Sheet for the month
  • [PASS/FAIL] (If using jobs) you ran Project Profitability Summary and fixed at least 1 exception

8) Knowledge check (3 questions)

  1. What’s the #1 goal of monthly close: perfect books or decision-grade numbers?
  2. If bank balances don’t match statements, what do you do first in QBO?
  3. Why do you run Balance Sheet every month (not just Profit and Loss)?

9) Next + Related

  • Previous: [Module 9 — Enhanced Job Costing & Profit Reporting]
  • Next: [Module 11 — QBO Cleanup / Rebuild]
  • Related modules (2–3)
    • [Module 4 — Bank Feeds]
    • [Module 6 — Progress Billing, Deposits, Retainers]
    • [Module 13 — Glossary + Cheatsheets]
  • Don’t do this warnings
    • Don’t “close” without reconciling. That’s just lying on a schedule.
    • Don’t carry big Uncategorized balances month to month. That’s how you create cleanup debt.
    • Don’t ignore negative A/R or A/P. It’s almost always a workflow mistake.
    • Don’t lock books before the month is actually clean.

Fast now = slow forever.

FAQ (short)

How long should monthly close take?
Once your workflow is stable, 30–90 minutes for most small contractor files (more if you’re behind or have lots of activity).

Do I have to close monthly if I’m cash-basis?
Yes. Cash basis doesn’t mean “no controls.” Reconciliation and cleanup still matter.

What if I find an error in a closed month?
Fix it deliberately, document it, and re-run the month’s reports. Closing is control, not denial.

Should I turn on book-closing controls in QBO?
If multiple people touch the file or you keep seeing recurring mistakes, yes—after you’ve stabilized your workflow.

What’s the fastest way to reduce close time?
Stop duplicates at the source: use Banking for Match (not blind Add) and run a weekly mini-close.

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