Month-end at a builder's accounts desk

The last four days of a month at a builder's accounts desk look the same in every office. Somebody is on the phone to a site asking for a stock statement. Somebody is holding a bill they cannot book and cannot return. Somebody is passing an entry to make a total agree, and hoping nobody asks what it represents.

The scramble is not caused by month-end. Month-end only reveals it. What is actually being done in those four days is a month of matching that was not done as it happened.

What must be true before the books close#

Closing a period is a claim. The claim is that the figures now describe everything that occurred and nothing that did not. That claim rests on a short list.

• Every bill received is either booked or on a stated hold. A hold is fine. A hold with no reason written against it is a bill that has been lost politely.
• Every goods receipt is matched or flagged. Material that arrived and has no bill against it is a liability whether or not anybody has typed it, and the method for getting there is in reconciling a vendor bill.
• Site stock has been counted and reconciled. Opening, plus received, less issued, equals closing — and the counted figure agrees with it, or the difference has a reason. The mechanics are in stock reconciliation.
• The bank is reconciled. Every line on the statement is identified against something in the books, not merely totalled.
• Advances outstanding have been aged. How much is out, to whom, since when, and against what.
• Retention balances agree per contract. Not in total. Per contract, because that is the only level at which retention money is ever released or argued about.
• Inter-entity balances agree in both directions. What one company shows as receivable, the other shows as payable, at the same figure.

And underneath all of it: every accrual has a basis somebody can explain. An accrual whose only justification is that a similar number was accrued last month is not an estimate, it is an inheritance.

The failures that make it a scramble#

Each of these is ordinary. Each of them is also predictable, which is the point.

The bill that arrives on the 2nd for work done in the previous month. The work happened, the period is being closed, and the document is in somebody's bag. This is the single most common cause of a month that has to be reopened.

The site that submits its stock statement late, every month. Not occasionally. The same site, the same delay, and the accounts desk plans around it instead of fixing it.

A payment made from the wrong entity's account. Convenient at the time, because that account had the balance. Now two sets of books are wrong, the inter-entity balances will not agree, and somebody must decide whether it was a loan, a reimbursement or an error. The general shape of that mess is covered in one builder, many companies.

A receipt with a reference nobody can match to a buyer. Money has arrived. It belongs to someone. Until it is identified it sits in a suspense line that grows quietly all year, and the identification only gets harder — the method is matching a bank line.

A bill held for a query that nobody chased. The query was legitimate on the day it was raised. Then it had no owner and no date, and now the vendor is calling about an invoice your books do not show at all.

The adjusting entry made to force a total to agree. The most damaging one, because it works. The books close, the difference disappears, and the cause is still there, producing the same difference next month against a starting position that no longer means anything.

Why the pile forms#

A hold is a legitimate state. A pile is not.

The difference is that a state has an owner and a date. Held pending rate confirmation from purchase, with the buyer who placed the order, since the day it was raised is a state — it can be listed, chased and cleared. Query written on a sticky note on top of a stack of bills is a pile, and a pile is only ever worked when somebody panics about it.

The same distinction applies to unmatched receipts, unreconciled site stock and open advances. Every one of them is fine as a tracked exception and poisonous as an undifferentiated heap. The heap is what makes the last four days feel like an emergency, because the heap is where all the surprises were being stored.

What makes the scramble smaller#

Match daily rather than monthly. The work is the same volume either way. Done daily, a mismatch is investigated while the storekeeper still remembers the lorry. Done monthly, the same mismatch is a research project. Nothing else on this list saves as much time.

Give every hold an owner and a date. Then a hold is a queue with a length, and a queue with a length can be reported on, chased and reduced. A hold without those is indistinguishable from a loss.

Close the previous period rather than leaving it open. An open period is a temptation. Entries drift backwards into it because backwards is easier than raising an adjustment, and after a few months nobody can say which figures are settled and which are still moving. A closed period forces the late bill to be handled as what it is — a known item, in a named month, with a reason — instead of being quietly absorbed.

Fix the recurring late submitter instead of planning around them. A site that is late every month is not an accident. It is a process that has no deadline it believes in, and it will still be late in a year.

The short version#

Month-end is not a task. It is an inspection of whether the month's matching was done, and it feels like a scramble precisely when it was not.

Before you close, know that every bill is booked or held with a reason, every receipt is matched or flagged, stock and bank are reconciled, advances are aged, retention agrees per contract, inter-entity balances agree both ways, and every accrual has a basis.

Then do the matching daily, make every hold a state with an owner and a date, and close the period behind you. The last four days get shorter every month you do it.