The monthly close checklist for construction companies

• Enter every vendor and subcontractor invoice dated in the month, coded to the right job and cost code.
• Run payroll and post labor burden to jobs.
• Issue every progress billing for the period, including approved change orders.
• Record equipment and other internal charges to jobs if you allocate them.

Costs that arrive after the books are closed are the most common reason a WIP looks better than the job really is.

• Reconcile every bank and credit card account to the statement.
• Tie the AR aging total to the accounts receivable balance, retainage included.
• Tie the AP aging total to the accounts payable balance, retainage included.
• Review accruals for costs incurred but not yet invoiced.

Sit down with each project manager and get a current estimated cost to complete. This is the input that drives percent complete, earned revenue, and gross profit for the whole schedule, so it deserves real time.

Ask each PM for their own read of percent complete as well. Where it differs sharply from the cost-based number, find out whether costs are missing or the job is running over.

Roll forward contract amounts for approved change orders, pull cost to date and billed to date from the system, and calculate percent complete, earned revenue, and each job's overbilling or underbilling. Move jobs that finished this month to the completed section rather than dropping them. The columns are explained in what is a WIP schedule.

Before you move on, scan for the patterns that usually mean something is wrong:

• Billed to date greater than the contract amount.
• Cost posted to a job with no billing.
• A job with no movement at all for the month.
• Estimated gross profit that turned negative or dropped sharply.
• Underbilling that grew from last month.

Record the change in overbillings and underbillings against revenue, as described in the percent complete adjustment.

Tie-out: the overbillings and underbillings on the balance sheet must equal the WIP totals. A close that does not tie is not finished.

With the entry posted, run the statements from your own books. A complete monthly package for a contractor is:

• Profit and loss, after the percent complete adjustment.
• Balance sheet, after the percent complete adjustment.
• AR aging and AP aging.
• The final WIP schedule, open and completed jobs.
• A short commentary on what moved and why.

This is the package your CPA, surety, and bank can work from. If any piece is missing or does not tie, fix it before it goes out. We explain what lenders and sureties look for in what makes a WIP schedule bonding-ready.