Are my books ready to close? How AI checks month-end readiness

What closing the month means

Closing a month means checking that its figures are complete and correct before anyone relies on them: all income and costs posted, the bank reconciled, payroll recorded, and nothing odd left sitting on the balance sheet. Once a month is closed, management accounts, VAT returns and reports to lenders can be built on it.

Small businesses often skip this step, not by choice but because nobody has time. The month’s figures then get used while the books are still half done, and the profit that looked healthy in the management pack moves once the missing bills arrive.

What a readiness check looks at

Nella’s Financial Controller runs more than 30 checks for a named month, grouped into eight areas:

Some checks need a feature your accounting software may not have, such as a fixed asset register. Those are shown as not supported, never as passed.

How the answer is laid out

1. Overall readiness: ready, nearly ready or not ready for that month, and why, in one line.
2. Blockers: what must be resolved before the figures can be relied on.
3. Unexplained: unusual movements and unreconciled differences, each with its amount and date.
4. Outstanding: work that is incomplete but not blocking.
5. Could not be assessed: every check that did not run, named.
6. Who holds each item: you, or your accountant.

The fifth part is not optional. A checklist that quietly leaves out what it could not check reads as a clean bill of health.

The rules that keep it honest

• Partly reconciled is not reconciled. If only some bank accounts or some lines could be checked, the bank is reported as unconfirmed.
• A missing amount is not zero. If your software did not report a figure, Nella says so.
• Differences are found, not guessed. Ask “what is this £465 difference?” and Nella searches your transactions by amount, counterparty and date. If nothing matches, it says what it searched. It does not offer a plausible story.
• Accountants set the tolerances. The thresholds behind each check are written and reviewed by qualified accountants, not chosen by the AI. A check without a reviewed threshold shows its figures but reaches no conclusion.

What it does not do

A readiness check tells you whether the books can be relied on. It does not sign the month off, reconcile a VAT return or decide how an item should be treated; those sit with you and your accountant. Where a correcting entry is needed, Nella can prepare it for you to approve: see Can AI post entries to Xero, QuickBooks or FreeAgent safely?

Example · illustrative figures

An owner asks: “Are October’s books ready to close?” The Financial Controller answers not ready. Two blockers: 14 bank lines from the last week of October are unreconciled, and October payroll has not been posted. One unexplained item: a £465 balance in a clearing account, with no matching transaction found. Outstanding: three supplier bills have no document attached. Could not be assessed: depreciation, because the business keeps no fixed asset register in its software.

A simple month-end checklist

• Post every sales invoice and supplier bill dated in the month.
• Reconcile every bank, card and payment account to the month-end statement.
• Post payroll and check it agrees with the pay run.
• Clear suspense and clearing accounts, or know what is in them.
• Record depreciation, prepayments and accruals.
• Compare the month with the last one and explain the big movements.
• Lock the month in your accounting software once you are done.

Related: What is an AI finance team? and Can AI check supplier bills before I pay them?

Sources

• GOV.UK: Running a limited company: company and accounting records

Nella provides financial information and education, not accounting or tax advice. Nella shows you the numbers. When a question needs professional judgement, such as a filing or a tax decision, Nella says so and points you to a qualified accountant.