Month-End Close Checklist for Job Shops

Most job shops close the books weeks after month-end, if they close them at all — and when the numbers finally arrive, job margins swing for reasons nobody can explain. A disciplined close fixes both problems. This checklist is the one we use with machine shops, fabricators and finishers between $3M and $30M in revenue. Adapt the timing to your team, but keep the order: each step depends on the one before it.

Before month-end: set up a clean cut-off

• Publish a close calendar. List every task, owner and due day (day 1, day 3, day 5 and so on). A close without a calendar drifts.
• Set receiving and shipping cut-offs. Material received and product shipped on the last day must be recorded in the right month. Tell the dock and shipping teams the cut-off time in advance.
• Get time entry finished. Every labor hour for the month needs to be clocked to a job or to an indirect code before payroll and job costing are closed.
• Chase open purchase orders. Ask buyers to confirm which material and outside processing arrived but haven't been invoiced yet.

Days 1–3: transactions and reconciliations

1. Record all sales invoices for product shipped in the month, and check that nothing shipped without an invoice.
2. Enter vendor bills received and accrue for goods and services received but not yet billed — especially material, outside processing (heat treat, plating, machining) and freight.
3. Reconcile every bank, credit card and loan account to statements. Investigate any reconciling item older than 30 days.
4. Record payroll, payroll taxes and benefits, and accrue wages earned but not yet paid at month-end.
5. Reconcile accounts receivable and accounts payable subledgers to the general ledger, and review aging reports for disputed items.

Days 3–5: inventory, WIP and job costing

This is where job shops differ from every other business — and where most closes go wrong.

1. Close completed jobs. Make sure every job that shipped has been relieved from work in process and its cost moved to cost of goods sold in the same month as the revenue.
2. Review open jobs. Run a WIP report listing material, labor and applied overhead on every open job. Look for jobs with costs but no activity, jobs that shipped but are still open, and jobs over their estimate.
3. Apply overhead correctly. Post overhead to jobs using your overhead absorption rate or machine-hour rates, then compare applied overhead to actual overhead for the month. A large gap means your rates need attention.
4. Reconcile inventory to the general ledger. Raw material, WIP and finished goods in your inventory system must equal the balance sheet. Investigate differences rather than plugging them.
5. Record scrap, rework and inventory adjustments with a reason code, and review any large adjustments.
6. Check outside processing. Every vendor bill for outsourced work should be coded to a job. Uncoded outside processing is one of the most common reasons job margins look wrong.

Days 5–7: accruals, review and reporting

1. Record depreciation, prepaid expense amortization and recurring accruals (rent, utilities, insurance, interest).
2. Review the balance sheet line by line. Every account should have a reconciliation or schedule supporting it.
3. Compare the income statement to last month, the same month last year and budget. Explain any line that moved more than a set threshold.
4. Review job profitability. List closed jobs with quoted versus actual hours, material and margin. This report drives better quoting.
5. Update the cash forecast. Roll your 13-week cash flow forecast forward using actual receivables, payables and the production schedule.
6. Publish the reporting package — income statement, balance sheet, cash flow, job profitability, WIP and key metrics — and hold a short review meeting.

Key metrics to include every month

Metric	What it tells you
Gross margin by job and customer	Which work earns money
Quoted vs. actual hours	Where estimates need correcting
Applied vs. actual overhead	Whether overhead rates are realistic
DSO and receivables aging	How fast customers pay
Backlog	Revenue already booked for coming months
Days to close	How quickly you get reliable numbers

How long should a job shop's close take?

A well-run job shop can close in five to ten business days. Getting there usually means fixing the upstream habits — time entry, receiving, job coding — rather than working faster at month-end. If your close takes longer than that, start with cut-offs and job coding; they pay back quickly.

If you'd like a second set of eyes on your close, our outsourced controller service runs this process every month for manufacturers, and our manufacturing accounting team can help you set up job costing correctly.

Frequently Asked Questions

What is the most important step in a job shop's month-end close?

Closing completed jobs and reviewing work in process. If shipped jobs aren't relieved from WIP in the same month as their revenue, gross margin swings from month to month and job profitability can't be trusted.

How do I accrue for material received but not yet invoiced?

Use receiving records and open purchase orders to list material and services received by month-end without a vendor bill, record an accrual at the PO price, and reverse it when the bill arrives. Your inventory system's received-not-invoiced report is the usual starting point.

Why doesn't our inventory match the general ledger?

Common causes include transactions posted to inventory accounts directly in the ledger, unrecorded scrap or adjustments, receipts entered in the wrong period and costing changes. Reconcile monthly and fix the cause instead of booking a plug entry.

How often should overhead rates be updated?

Review applied versus actual overhead every month and update rates at least annually, or sooner if volume, staffing or equipment changes significantly. Persistent over- or under-absorption is a sign the rates no longer reflect the shop.