Month-end close
The structured sequence of bookkeeping and accounting tasks completed at the end of each calendar month — reconciling the bank, posting accruals and prepayments, reviewing aged debtors and creditors, and locking the period — so that management accounts are accurate and trustworthy.
Also: month-end
Month-end close is the point at which a business declares that one month’s numbers are complete. It is not a single task but a checklist: reconcile the bank, clear any unallocated receipts, post accruals for costs incurred but not yet invoiced, reverse last month’s prepayments, confirm aged debtors and creditors look correct, and — if you file quarterly VAT — check that the period’s transactions are coded to the right tax rates before locking it.
Why the sequence matters
The tasks are deliberately ordered. Bank reconciliation must come first because every other figure depends on it: if £1,200 of payments are still unmatched, the aged creditors report is wrong, the profit and loss is wrong, and any accrual calculated against it may be wrong too. Once the bank is clean, accruals and prepayments adjust the P&L for timing. A month-end that skips this step — posting the gas bill in April when it covers March — produces accounts that swing with cash movement rather than trading activity, making them unreliable for decisions.
In Xero, locking a period (Account Settings → Lock dates) prevents accidental back-posting once the close is signed off. A clean trial balance with no unexplained suspense balances and a bank balance matching the statement is the practical test that close is genuinely done.