Bookkeeping Tips for the Start of the Month: Your Fresh Start Checklist
The first few days of each month set the tone for your financial management success. Establishing a solid start-of-month bookkeeping routine ensures accurate records, timely reporting, and proactive financial decision-making. Here's your comprehensive guide to beginning each month strong.
Why Start-of-Month Bookkeeping Matters
The Compound Effect: Consistent monthly routines prevent the overwhelming backlog that kills bookkeeping accuracy. Small monthly efforts compound into clean year-end books and stress-free tax preparation.
Business Intelligence Advantage: Timely monthly closing provides current financial data when it's most valuable—when you can still act on insights and adjust course.
Time Investment: 2-4 hours of focused work in the first week of the month saves 15-20 hours of chaos later.
Close Out the Previous Month
Reconcile All Accounts
Bank Account Reconciliation:
Match bank statement to accounting records for previous month
Identify and investigate all discrepancies
Record any bank fees, interest, or automatic payments missed
Verify ending balance matches bank statement exactly
Credit Card Reconciliation:
Review all credit card statements thoroughly
Categorize any uncategorized transactions
Match receipts to charges
Flag any suspicious or unauthorized charges
Payment Processor Reconciliation:
Verify PayPal, Stripe, Square deposits match records
Account for processing fees
Reconcile refunds and chargebacks
Confirm timing of deposits to bank
Pro Tip: Don't move forward until reconciliation is complete. Building on inaccurate data compounds errors.
Review and Categorize Transactions
Cleanup Tasks:
Review all "uncategorized" transactions from previous month
Ensure consistent category usage (marketing, not advertising and marketing)
Split transactions if needed (meal with both food and tip)
Add notes or memos for future reference on unusual items
Common Mistakes to Fix:
Personal expenses mistakenly coded as business
Business expenses left uncategorized
Wrong categories that distort reporting
Missing vendor names or descriptions
Accounts Receivable and Payable Management
Accounts Receivable Review
Collection Actions:
Generate aging report (who owes what and how long)
Send friendly reminders for invoices 1-15 days overdue
Make phone calls for invoices 30+ days overdue
Implement late fees for seriously overdue accounts (per your terms)
Flag problematic clients for future cash-in-advance requirements
Invoicing for New Month:
Send recurring invoices for monthly clients
Invoice completed projects from previous month
Review retainer balances and send renewals
Update pricing if scheduled increases apply
Cash Flow Impact: Aggressive early-month collections improve cash position throughout the month.
Accounts Payable Organization
Bill Management:
Review all bills due during current month
Schedule payments to optimize cash flow (pay on due date, not early)
Identify early-payment discounts worth taking (2/10 net 30)
Set up payment reminders to avoid late fees
Verify all vendor information is current
Strategic Timing: Schedule large payments after expected major deposits when possible.
Generate and Analyze Financial Reports
Essential Monthly Reports
Profit & Loss Statement (Income Statement):
Review revenue trends month-over-month
Compare to same month last year for seasonal context
Analyze expense increases or decreases
Calculate profit margins by service/product line if possible
Balance Sheet:
Verify asset accounts are reasonable
Review liability balances and payment schedules
Check equity section for accuracy
Calculate current ratio (current assets ÷ current liabilities)
Cash Flow Statement:
Identify sources of cash inflows and outflows
Compare to budget or projections
Calculate operating cash flow
Project next month's cash position
Key Metrics to Track
Financial Health Indicators:
Gross Profit Margin: (Revenue - COGS) ÷ Revenue
Net Profit Margin: Net Income ÷ Revenue
Quick Ratio: (Cash + Receivables) ÷ Current Liabilities
Days Sales Outstanding: (Accounts Receivable ÷ Revenue) × Days
Operational Metrics:
Customer acquisition cost
Average transaction value
Customer lifetime value
Revenue per employee (if applicable)
Strategic Review and Planning
Budget vs. Actual Analysis
Comparison Points:
Where did you exceed budget and why?
Where did you underperform against projections?
Were variances one-time or trending issues?
Do budgets need adjustment based on reality?
Action Items:
Adjust spending in over-budget categories
Investigate revenue shortfalls
Capitalize on unexpected opportunities
Update projections for remaining year
Tax Preparation Tasks
Quarterly and Annual Planning:
Set aside money for estimated tax payments (if quarterly filer)
Review year-to-date income for tax planning
Identify potential deductions to maximize
Assess need for accountant consultation
Sales Tax Compliance:
Calculate sales tax collected previous month
Verify rates are current for all jurisdictions
File and pay sales tax if monthly filer
Set aside funds for quarterly filers
Documentation and Communication
Receipt and Documentation Review
Organization Tasks:
Ensure all previous month's receipts are saved digitally
Match physical receipts to transactions in system
Upload supporting documentation to accounting software
Flag any missing receipts for large purchases
Filing System:
Create previous month's folder (physical or digital)
Archive bank statements and reconciliation reports
Save copies of sent invoices and paid bills
Backup all financial data to cloud and external drive
Team and Stakeholder Communication
Internal Reporting:
Share financial summary with partners/owners
Provide department managers with their expense reports
Discuss any concerning trends or positive developments
Set financial goals for current month
External Communication:
Send financial reports to investors or board if applicable
Update lenders on financial covenants if required
Prepare for quarterly accountant review if scheduled
Communicate with tax preparer about significant changes
Ongoing Tasks Throughout the Month
Daily Habits (5-10 minutes)
Check bank balances for any surprises
Record and categorize new transactions
Photograph receipts immediately
Review accounts receivable for new payments
Weekly Check-ins (30 minutes)
Review cash flow and upcoming obligations
Process new bills and invoices
Follow up on overdue payments
Quick profit/loss check for major variances
Common Start-of-Month Mistakes to Avoid
Procrastination: Waiting until mid-month loses the strategic advantage and creates catch-up stress.
Skipping Reconciliation: Moving forward with unreconciled accounts compounds errors and creates huge problems later.
Ignoring Small Discrepancies: "Close enough" reconciliations hide errors that grow into major issues.
No Analysis: Generating reports without reviewing them wastes the opportunity for strategic insights.
Solo Operation: Not involving team members who can provide context on variances and unusual transactions.
Tools to Streamline Start-of-Month Process
Automation Options:
Bank feed imports in QuickBooks
Automatic receipt capture apps
Recurring invoice automation
Payment reminders and scheduling
Report generation automation
Templates and Checklists:
Month-end closing checklist
Standard report templates
Email templates for payment reminders
Meeting agenda for financial reviews
The Bottom Line
A disciplined start-of-month bookkeeping routine transforms financial chaos into clarity. The first week of each month is your opportunity to close the previous month accurately, understand your financial position, and plan strategically for the weeks ahead.
Success Formula: Consistency beats perfection. A solid routine executed monthly is far superior to perfect books done sporadically.
Time Investment Reality: The 2-4 hours spent on start-of-month bookkeeping saves exponentially more time than scrambling to catch up later.
Start strong each month, and you'll maintain control of your business finances all year long.