Month-end close and reconciliation

What AP owns in the close

If an invoice for October work sits unentered in someone’s inbox, October expenses are understated and November’s are overstated. If the AP aging does not agree to the Accounts Payable account in the general ledger, the balance sheet cannot be signed off. Those two risks drive almost every step in the AP close.

The close waits on AP. In Ledge’s 2025 survey of 100 finance professionals, 50% of finance teams took six or more business days to close the books.

The AP month-end checklist

1. 1

   Set and announce the cut-off

   Tell suppliers, approvers and receiving the last day invoices count as bills for this month.

2. 2

   Capture every invoice received

   Clear the AP inbox, scanned mail and invoices waiting with approvers.

3. 3

   Clear exceptions

   Resolve or document every open match exception. Unresolved ones may need an accrual.

4. 4

   Chase approvals

   Get pending approvals decided, or note which bills will be accrued.

5. 5

   Confirm everything reached the ledger

   Every approved bill should be posted in the accounting system. Fix sync or posting failures now.

6. 6

   Accrue received-not-invoiced

   Book an accrual for goods and services received before cut-off but not yet billed, and reverse it next month.

7. 7

   Review the AP aging

   Look for old items, debit balances and unapplied credits.

8. 8

   Reconcile AP to the balance sheet

   Agree the aging total to the AP balance and explain any difference.

9. 9

   Reconcile key vendor statements

   For your largest vendors, agree their statement to your ledger.

10. 10

    Sign off

    Record who reviewed the reconciliation and when.

The month-end close checklist lesson has this list as a free CSV template you can open in Excel or Google Sheets.

Accruals: costs without an invoice yet

An AP accrual records an expense and a liability for goods or services you received in the month but have not been invoiced for yet. Build the list from records, not memory: receiving records matched against open purchase orders, plus a recurring list for costs without a PO, such as utilities and contract services.

The October 31 entry debits the expense or inventory accounts and credits accrued liabilities for $23,590. On November 1 it is reversed. When the real invoices arrive they are entered as normal bills, and the reversal stops the cost being counted twice. If an invoice differs from the estimate, only the difference lands in November.

Reconciling AP to the balance sheet

The AP aging report is the subledger: every open bill by vendor. The Accounts Payable line on the balance sheet is the general ledger. They should agree. To check:

1. 1

   Pick the date

   Use the last day of the month you are closing, and run every report for that date.

2. 2

   Run both reports

   Take the AP aging summary total and, on the accrual basis, the Accounts Payable balance from the balance sheet.

3. 3

   Compare

   If they agree, move on to vendor statements. If not, list the difference and find what makes it up.

4. 4

   Explain every difference

   Look for journal entries posted straight to the AP account, unapplied vendor credits or payments, and bills or payments dated in the wrong period.

5. 5

   Check nothing is missing

   Invoices approved in your AP tool but not yet posted are a liability the ledger does not show.

6. 6

   Document and sign off

   Keep both reports, the list of reconciling items and who reviewed them.

A balance sheet run on the cash basis will not match the aging, so check the basis first if the difference looks like the whole AP balance.

Vendor statement reconciliation

The other AP reconciliation compares one supplier’s statement with what you have recorded for that supplier. It finds invoices you never received, credits you never applied and payments you made twice. Do it monthly for your largest and most active suppliers.

Pull both sides at the same date, compare balances, then match line by line. Every difference is usually one of five types: an invoice on the statement but not in your ledger (request a copy, then enter or accrue it), an invoice in your ledger but not on the statement (check for a duplicate before paying), a payment in transit (wait one cycle), a credit on the statement you have not recorded (get the credit note and apply it), or an amount in dispute (agree it with the supplier and buyer).

Never pay straight from a statement. A statement is not an invoice, and paying statement lines without the underlying invoices is a common route to duplicate payments.

Doing it in software

In QuickBooks Online, run Reports › Standard reports › Accounts payable aging summary and the Balance Sheet for the same date. In Xero, compare the aged payables report with the balance sheet. Aequo AP covers the steps up to the ledger: its Work Queue filters show bills that need approval, are overdue, are missing a PO or failed to sync, and the Exception Aging report lists open exceptions. Aequo does not post accruals or produce the AP aging report; those happen in your accounting system.