Hotel Month-End Close Checklist: A Practical Framework

A hotel close is not difficult work. It is a large number of small tasks that have to happen in a particular order, mostly under time pressure, usually while the operation keeps trading. What makes a close go badly is almost never the complexity of any single reconciliation. It is a task that nobody realised was theirs.

The remedy is unglamorous: write the sequence down, give every task an owner and a due day, and record when each one is finished. This article describes that sequence, from the revenue cut-off to the final sign-off, and explains why each stage sits where it does.

Why the sequence matters

Close tasks are not independent. Almost every one of them consumes the output of an earlier one, and doing them out of order means doing several of them twice.

Revenue has to be right before departmental results mean anything. Payroll has to be posted before labor percentages can be reviewed. Accruals depend on knowing which invoices arrived. The financial statements cannot be reviewed until the balance sheet is reconciled, and commentary cannot be collected until the departments have something final to comment on.

This is why a close checklist sorted alphabetically, or grouped only by department, is less useful than it looks. The order is itself part of the instruction. When a checklist is written in closing sequence, a new team member can follow it without being told what depends on what.

One further point about ordering: put the tasks with external dependencies as early as the sequence allows. Anything that requires a bank, a supplier, an agency or another department to respond should be started on day one, because you do not control when the answer comes back.

Stage one: revenue reconciliation

Revenue comes first because everything downstream depends on it, and because it is where errors are most expensive to find late.

The core checks:

• Night audit totals for the final day of the period agree to the property management system's month-to-date figures.
• Property management system revenue agrees to the trial balance, by revenue category, with any difference explained rather than plugged.
• Rooms revenue splits by segment agree to what the revenue team is reporting, so finance and revenue management are not describing different months.
• Point-of-sale totals for each outlet agree to the trial balance.
• Credit card settlements agree to the amounts deposited, with timing differences identified.
• Complimentary rooms, house use and rebates are reviewed for anything unusual or unapproved.
• Package allocations have been applied, so room revenue is not carrying value that belongs to food and beverage or spa.
• Other operating departments, including spa, retail, parking and resort fees, are reconciled the same way.

The habit that pays off here is documenting the difference rather than the total. A reconciliation that shows only the agreed number proves nothing next month. One that shows what did not agree, and why, is a record you can actually use when the same difference appears again.

Stage two: payroll

Payroll is usually the largest expense line and the one most affected by period-end timing, so it comes early.

• The final payroll journal for the period is posted and agrees to the payroll provider's report.
• Days worked but not yet paid are accrued, and the accrual is calculated on a consistent basis rather than estimated afresh each month.
• Overtime and agency labor are reviewed by department, since these are the lines most likely to need explanation later.
• Vacation, holiday and other leave accruals are updated.
• Payroll taxes, benefits and employer contributions are posted and reconciled.
• Departmental allocations are checked, because a mis-coded position distorts two departments at once.

Reviewing overtime and agency labor during the close, rather than after the statements are issued, is what makes the departmental commentary stage go quickly. By the time you ask a department head about labor, you should already know which line you are asking about.

Stage three: payables and cut-off

Cut-off is where accuracy is most often lost, because it depends on people outside finance sending things in on time.

• The invoice cut-off date is communicated in advance and applied consistently.
• Goods and services received before period end are recorded in the period, whether or not the invoice arrived.
• Open purchase orders and receiving reports are reviewed for anything unbilled.
• Department heads confirm known costs that have not yet been invoiced.
• The supplier statement reconciliation is performed for major suppliers.
• The accounts payable subledger agrees to the general ledger control account.

The confirmation from department heads is worth building into the calendar as a formal task with a deadline. A short list of costs incurred but not yet invoiced, sent by each department on a fixed day, prevents most cut-off errors and takes each person a few minutes.

Stage four: accruals and prepaid expenses

Accruals are where consistency matters more than precision. A method applied the same way every month produces comparable results even when the estimate is imperfect. A method reinvented each month produces variances that are entirely artificial.

• The standard recurring accrual schedule is posted, with the calculation basis documented.
• Utilities are accrued where bills arrive after period end, using a consistent estimation method.
• Prior-period accruals are reversed, and the reversal is checked against the actual invoice.
• Any accrual that has been carried for several periods without being cleared is investigated.
• Prepaid expenses are amortised for the period, and the remaining balance is checked to supporting schedules.
• Insurance, licenses, contracts and subscriptions are reviewed for correct period allocation.

A long-standing accrual that nobody can explain is one of the more common findings in a hotel balance-sheet review, and it is much easier to prevent than to unwind.

Stage five: receivables and cash

• The accounts receivable ageing is reviewed and agrees to the general ledger control account.
• City ledger and guest ledger balances are reviewed for old or disputed items.
• Advance deposits and group deposits are confirmed and correctly classified as liabilities.
• Bad debt provision is reviewed against the ageing and against known disputes.
• Bank reconciliations are completed for every account.
• Outstanding items on bank reconciliations are reviewed, particularly anything ageing.
• Petty cash and house banks are counted and agreed.
• Credit card receivables in transit are reconciled to settlement reports.

Stage six: balance-sheet reconciliations

Every balance-sheet account should be reconciled to something outside the ledger, or explicitly reviewed and signed as immaterial. The discipline that makes this work is requiring supporting detail rather than a balance: a reconciliation that says the account is correct because the ledger says so is not a reconciliation.

• Each account has a named preparer and a named reviewer, and both are recorded.
• Reconciling items are listed individually with an expected clearing date.
• Inventory balances agree to the count, and any variance is investigated before it is posted.
• Fixed asset additions, disposals and depreciation are posted and agree to the asset register.
• Intercompany and owner accounts are agreed with the counterparty rather than assumed.
• Suspense and clearing accounts are cleared to zero, or the residual is explained.

Stage seven: departmental review

Only now are the departmental results stable enough to review. Doing this earlier means discussing numbers that are about to change, which erodes confidence in the whole process.

• Departmental profit and loss statements are reviewed line by line against budget and prior year.
• Variances above the agreed threshold are identified and sent to the responsible department head.
• Commentary is collected in a consistent format, with a stated deadline.
• Statistics are checked: occupancy, ADR, RevPAR, covers, average check, cost per occupied room and labor percentages.
• Unusual or one-off items are flagged for the executive summary before anyone starts writing it.

Stage eight: management reporting

• The financial statements are produced and reviewed for presentation as well as accuracy.
• The management report or owner pack is assembled.
• The executive summary is written from the departmental review, not from memory.
• The forecast is updated for anything the close revealed, particularly permanent variances.
• Key statistics and comparatives are checked against the schedules they came from.
• Distribution dates and recipients are confirmed against the reporting calendar.

Updating the forecast during the close, while the causes are fresh, is a small discipline with a large effect. A forecast updated a fortnight later is updated from a spreadsheet rather than from an understanding of what happened.

Stage nine: final sign-off

• The controller reviews the completed checklist and confirms every task is closed or explained.
• Outstanding items are listed with an owner and a date, rather than carried silently.
• The period is locked in the accounting system.
• The general manager or director of finance approves the results.
• The completed checklist, with sign-offs, is filed with the period's records.
• Anything that went wrong is noted for the next close while it is still remembered.

That last point is the one most often skipped and the one that compounds. A close that ends with two lines about what caused delay is a close that gets shorter over time.

Building your own version

A checklist copied from anywhere, including here, is a draft. Making it yours takes one cycle of deliberate attention.

Delete what does not apply. A property without a spa does not need spa reconciliation lines, and lines that are permanently marked "not applicable" train people to skim.

Add what is specific to you. Owner reporting requirements, brand submissions, local tax filings, management fee calculations and asset manager deadlines all belong on the list.

Assign owners by name. "Accounting" is not an owner. A task assigned to a department is a task nobody has agreed to do.

Set due days, not due dates. Working day one, working day two and so on survive from month to month. Calendar dates have to be rewritten every period and are therefore quietly ignored.

Record completion visibly. The value of a checklist is not the ticking. It is that at any point during the close, anyone can see what is done, what is not, and who is holding it.

This article describes general practice. It is not accounting, tax, audit or legal advice, and it does not replace your own professional judgment or your company's procedures. Every example uses invented figures for a fictional property. Read the disclaimer.