Process: Closing Our Books

Closing Our Books

What does it mean to close our books?

Closing the books at the end of each period (month, quarter, or year) means making sure all transactions have been accurately recorded and reconciled in QBO. It locks in our financial data and prevents retroactive changes that could mess with our reporting down the line.

Why does it matter?

Good financial hygiene is core to how we operate. Closing the books regularly keeps our records accurate, gives us a clear picture of cash flow, and makes sure our actuals line up with our operating plan — so we can make smart decisions about spend and investment.

Monthly Close Process

We aim to close the books by the 7th of each month, right after bank statements become available. This keeps our financials current and feeds into our budget vs. actuals tracking in QBO.

Tools We Use:

• QBO: General ledger, financial reporting, budgeting, and tracking budget vs. actuals.
• Ramp: Vendor payments and expense management.
• Amex Card: Corporate cards held by Bomee, Marc, and Jason; reconciled in QBO.
• Justworks: Payroll management.
• Google Drive: Storing documents (Shared Drives>GrowthOps>Financial Operation>YEAR).

The Closing Process:

1.Revenue Accounts

Our revenue is broken into a few key categories:

• Subscription: Our primary recurring revenue, divided into three subaccounts:

  • Lenders-Subscription: Subscription fees paid by our lending partners.
  • Real Estate: Fees from real estate-related services.
  • Subscription-Utility & Programs: Subscription fees from utility & Programs-based clients.

• Transaction Fees: Income generated from transactions, broken down into:

  • Contractors: Fees charged to contractors from services rendered.
  • Lenders-Transaction Fees: Fees earned from lending-related transactions.

• Grants: Funds received from government or private grants, typically tied to specific projects or goals.

• Services: Revenue from non-subscription-based services provided to clients.

• Discounts Given: Reductions applied to invoices, tracked as a separate account to monitor discounts provided.

Review Process

Each month we make sure revenue recognition is applied correctly across all categories, verify that every invoice has been recorded and collected, and compare planned revenue against what’s in the books. Any discrepancies get flagged and resolved.

2. Expense Accounts

Most of our expense tracking is automated through Ramp, Justworks, and our Amex card, which makes this part pretty smooth.

• Ramp: Review all pending invoices and transactions to confirm everything is categorized correctly before syncing with QBO. Ramp is reconciled directly with its statement — no clearing account needed.
• Justworks: Justworks — Pull payroll and benefits reports and review each line item against QBO.
• Amex Card: Reconcile all imported transactions and check for duplicates or miscategorization.

3.Bank Reconciliation

Each month we download bank statements and reconcile them against QBO — every deposit, withdrawal, and transfer gets checked. Any discrepancies are identified and corrected.

All statements are stored in Google Drive: Shared Drive → Strategic Growth → Financial Operations → YEAR → Bank Statements.

4.Closing the Books

Once everything is reconciled, we lock the books in QBO. Here’s the checklist we run through before doing that:

Review Checklist Before Closing

• Balance Sheet Review:
  • Bank accounts: Ensure all cash accounts are reconciled.
  • Loans and Credit Cards: Confirm loan balances and credit card statements are fully reconciled.
  • Liability accounts: Verify balances in tax, payroll liabilities, etc.
  • Accounts Receivable (AR) & Accounts Payable (AP): Review balances to ensure invoices and bills are updated.
• Profit and Loss (P&L) Comparison: Check the P&L statement with previous periods to spot discrepancies and confirm accurate categorization.
• Cash Flow and Payroll Review: Examine cash flow, verifying alignment with P&L and cash balances. Payroll accounts and tax liabilities should match provider reports (e.g., Justworks).

5. Review Budget vs. Actuals in QBO

After the books are closed, review budget vs. actuals using QBO’s built-in budget feature. Compare P&L actuals against the current budget and flag material variances for discussion.

Quarterly/Annual Closing

Same process as the monthly close, but may require a few extra reviews and reports depending on the period. For the annual close, we also set a closing date and password in QBO to fully lock the books and prevent any retroactive changes.