A SaaS month-end close is the set of tasks that turns a month of bank, billing and payroll activity into numbers you can report: set the cutoff and reconcile every bank, card and payment processor account (days 1 to 3), tie billing to revenue and roll forward deferred revenue, review receivables (days 3 to 5), book accruals, prepaids, payroll, commissions under ASC 340-40 and capitalized software (days 4 to 6), review the balance sheet and run a flux analysis against last month and the budget (days 7 to 8), then send the P&L, metrics and cash outlook (days 8 to 10).
Download the checklist (.xlsx): all 35 tasks below with the business day, owner, done and notes columns and a progress tab by area. No email needed.
This list is for a US startup that sells subscriptions, keeps accrual books and has a bookkeeper or a fractional controller. Days are business days after the last day of the month; move them to fit your own calendar. In December the same close runs with extra annual tasks, which are in our year-end close checklist.
The month-end close process at a glance
- Days 1 to 3, cutoff and cash: make sure everything that belongs to the month is in it, then reconcile banks, cards, Stripe and loans. Cash is the one number you can prove from an outside statement, so it goes first.
- Days 3 to 5, revenue: billing to ledger, the deferred revenue roll-forward, new contracts, the AR aging and sales tax.
- Days 4 to 6, costs: accruals for bills that arrive late, prepaid amortization, payables, payroll, commissions, stock-based compensation, capitalized software, fixed assets and intercompany.
- Days 7 to 8, review: every balance sheet account reconciled, a flux analysis against last month and the budget, and a second person's sign-off.
- Days 8 to 10, reporting: financial statements, SaaS metrics, the updated cash forecast and the investor update.
The checklist
1. Cutoff, bank and card reconciliations (days 1 to 3)
- Set the cutoff (day 1). Agree the close calendar, then lock the period in the accounting system once the month is closed so nothing is posted into it afterwards.
- Confirm every invoice for the month was issued (day 1). Usage charges, overages, setup fees and mid-month upgrades should be billed and dated in the month they belong to.
- Import and categorize bank and card transactions (day 1). Bring every feed up to the last day of the month; categorize or flag anything the rules did not catch.
- Reconcile every bank account (day 2). Ledger balance equals the statement balance on the last day of the month, with outstanding items listed. Include money market and treasury accounts.
- Reconcile Stripe or your payment processor (day 2). Gross charges minus fees, refunds and disputes equals the payouts that reached the bank; the clearing account ends at zero.
- Reconcile credit cards and expense reports (day 3). Each card statement ties to the ledger, receipts are attached for spend above your policy limit, and uncategorized spend is cleared.
- Record loan balances, interest and fund income (day 3). Agree loan and venture debt balances to the lender statement, accrue interest, and book interest or fund income on idle cash.
2. Revenue, deferred revenue and receivables (days 3 to 5)
- Tie billing to the ledger (day 3). Invoices in the billing system for the month equal revenue recognized plus the change in deferred revenue; explain any gap.
- Roll forward deferred revenue (day 4). Opening balance plus billings minus revenue recognized equals the closing balance, by customer for annual and multi-year contracts. See deferred revenue.
- Review new and changed contracts (day 4). Setup fees, discounts, free months, multi-year prepayments and usage tiers can change when revenue is recognized. See SaaS revenue recognition.
- Update prepaid credits and breakage (day 4). Unused prepaid usage credits stay in deferred revenue until used or expired. See credit-based pricing and revenue recognition.
- Review the AR aging (day 4). Sort open invoices into 0 to 30, 31 to 60, 61 to 90 and over 90 days, chase the old ones, and book an allowance or write-off for what will not be paid. See accounts receivable.
- Separate failed card payments from receivables (day 5). A renewal stuck in dunning is a churn risk, not an invoice for collections; track it with your billing tool.
- Reconcile MRR and ARR to revenue (day 5). Board metrics and GAAP revenue differ by timing, one-off fees and annual invoices; write down why. The ARR waterfall calculator builds the bridge.
- Record sales tax collected as a liability (day 5). Sales tax and VAT you collect are owed to the state or country, not revenue; check the filing due dates. See California SaaS sales tax in 2027.
3. Accruals, prepaids and payables (days 4 to 6)
- Accrue costs billed after month end (day 4). Cloud hosting, AI model usage, contractors, legal and accounting fees used this month belong in this month. See AI COGS and gross margin for usage costs.
- Amortize prepaid expenses (day 5). Annual software, insurance and deposits paid upfront are expensed over the months they cover; keep a prepaid schedule.
- Review open bills and vendor credits (day 5). Every bill received in the month is entered, duplicates and stale credits are cleared, and the AP aging matches the ledger.
- Classify costs between COGS and operating expenses (day 6). Hosting, third-party APIs and customer support go to cost of revenue, which decides your gross margin.
4. Payroll, commissions and equity (days 5 to 6)
- Reconcile the payroll register to the ledger (day 5). Gross wages, employer taxes and benefits by department match what the payroll provider ran.
- Accrue wages and bonuses earned but not yet paid (day 5). Days worked after the last pay date and bonuses earned this month are this month's expense.
- Calculate commissions and capitalize them under ASC 340-40 (day 6). Incremental costs of winning a contract are an asset amortized over the period of benefit; if that period is one year or less you may expense them. Book this month's amortization. See SaaS revenue recognition.
- Record stock-based compensation (day 6). Book the expense for vested grants and record new grants, exercises and cancellations against board approvals.
- Collect W-9s from new contractors (day 6). Do it when they start, not in January; you need the tax ID for year-end 1099s.
5. Capitalized software, fixed assets and intercompany (days 5 to 6)
- Record capitalized software (day 5). Under current GAAP (ASC 350-40), capitalize eligible costs in the application development stage and start amortization when a feature goes live. See capex in software development and ASU 2025-06.
- Update the fixed asset register (day 6). Add laptops and equipment bought in the month, remove what was sold or lost, and book depreciation.
- Agree intercompany balances, if you have a subsidiary (day 6). Both entities show the same balance, the service or transfer-pricing charge is booked, and foreign currency balances are revalued.
6. Close review and flux analysis (days 7 to 8)
- Review every balance sheet account (day 7). Each account has a reconciliation or schedule behind it, and suspense and clearing accounts are at zero.
- Run a flux analysis against last month and the budget (day 7). Explain every line that moved more than a threshold you set in dollars and percent. See budget vs actual variance analysis and the SaaS budget template.
- Have a second person review and sign off (day 8). Someone other than the preparer reviews the reconciliations and journal entries, then the period is locked.
7. Reporting pack and forecast update (days 8 to 10)
- Produce the P&L, balance sheet and cash flow statement (day 8). Same format every month so trends are easy to read.
- Update SaaS metrics from the closed books (day 9). MRR and ARR, net revenue retention, gross margin, burn multiple and runway.
- Update the cash forecast with actuals (day 9). Replace the month that ended with actuals and add a month at the end. See the 12-month cash flow forecast and the 13-week cash flow.
- Send the reporting pack or investor update (day 10). Financials, metrics, variance commentary and the cash outlook. The investor update template lays it out.
- Write down what slowed the close (day 10). One line per delay (a late bill, a missing receipt, a manual step) so next month is faster.
Flux analysis: what to look at
A flux analysis compares each line of the P&L and balance sheet with last month and with the budget, and asks for an explanation wherever the change is bigger than a threshold you set, for example a dollar amount and a percentage together so that small lines do not create noise. It is the review step that catches a missed accrual, a double-booked bill or revenue in the wrong month before the numbers go to the board.
- Against last month: revenue should move roughly with MRR; payroll with headcount; hosting with usage. A jump with no business reason is usually a booking error.
- Against the budget: split the revenue miss into volume, price, expansion and churn, and the spend miss into timing and real overspend. Our budget vs actual variance analysis guide works through an example, and the SaaS budget and rolling forecast template does the comparison as months close.
- On the balance sheet: deferred revenue should rise in the months you invoice annual contracts and fall as they are earned; receivables should track billings and your collection terms. A balance that grows every month without a reason is a reconciliation that is not being done.
The reporting pack
Close the month with the same short pack every time: P&L, balance sheet and cash flow statement, the SaaS metrics from the closed books, a paragraph on the main variances, and cash runway from the updated forecast. Then send it to the board or investors. The investor update template lays out the sections, and the 12-month cash flow forecast gives the cash outlook from the closed month.
Who does what
At seed stage a bookkeeper or bookkeeping firm usually handles the reconciliations, accruals and revenue schedules (areas 1 to 3 and 5), the payroll provider supplies the register for area 4, and the founder or a fractional CFO owns the review and the reporting pack (areas 6 and 7). The download has an owner column so you can assign each line. If you are choosing who to hire, our CFO vs FP&A software vs bookkeeper comparison and the startup bookkeeping cost comparison show the options.
FAQ
What is a month-end close checklist?
A list of the accounting tasks that have to be finished after each month ends before the numbers can be reported: reconciliations, revenue and deferred revenue, accruals, payroll, fixed assets, review and reporting. Each task has an owner and a target business day so the close finishes on the same date every month.
What are the steps of the month-end close process?
Set the cutoff, reconcile cash accounts (bank, card, payment processor, loans), record revenue and roll forward deferred revenue, review receivables, book accruals and prepaid amortization, record payroll, commissions and stock-based compensation, record capitalized software and depreciation, agree intercompany balances, review the balance sheet, run a flux analysis, sign off and lock the period, then produce the reporting pack.
How long should a month-end close take?
This checklist is laid out over 10 business days. A company with one bank account, card-only billing and no capitalized software can finish sooner; one with annual invoices on terms, commissions and a subsidiary needs the full schedule. What matters more than the number is that it ends on the same day every month, so the board pack and the cash forecast are always built on closed books.
What is the difference between month-end and year-end close?
Year-end is a month-end close plus tasks that happen once a year: W-2s and 1099s, the cap table and 409A check, R&D cost data for Section 174A and Form 6765, the fixed asset count, any audit or review and next year's budget. A clean close every month makes the year-end close a short job. See the year-end close checklist.
Why do SaaS companies need a deferred revenue roll-forward every month?
Because annual and multi-year contracts are billed upfront but earned over time. The roll-forward (opening balance plus billings minus revenue recognized equals closing balance) proves that revenue was recognized in the right month, and it is the first schedule an auditor or an acquirer asks for.
Do startups on cash-basis books need a month-end close?
Yes, a shorter one. Bank and card reconciliations, categorization, payroll and the reporting pack still apply. Investors and lenders usually ask for accrual numbers, so the revenue, accrual and prepaid steps are worth adding before a fundraise.
Is there a month-end close checklist in Excel?
Yes, the Adlega month-end close checklist is a free .xlsx with task, details, business day, owner, done and notes columns, a filter, and a progress tab that counts open tasks by day. No sign-up needed.
This checklist is general information, not tax, legal or accounting advice. Your accountant decides how each item applies to your company.
Once the month is closed, put the actuals to work. Load them into Adlega and update the forecast from them.