Monthly Close, Part 2: AR, AP & Payroll (Steps 4–6)

Step 4) Reconcile Accounts Receivable (AR)

What: Match payments to invoices; clear partials/duplicates; apply credits. Why: Accurate AR drives collections and reliable cash forecasts. Pro tip: Send statements on Day 1–2 each month; flag AR >45 days for outreach.

Step 5) Reconcile Accounts Payable (AP)

What: Enter missing bills; apply credits; verify prepaids and retainers. Why: Avoid late fees, manage cash timing, and keep vendor relationships strong. Pro tip: Batch payments on a set weekday to control outflows.

Step 6) Record payroll cleanly

What: Post payroll journal: gross wages, taxes, benefits, employer costs. Why: True labor cost includes payroll taxes and benefits, not net pay alone. Pro tip: Map department/class to track cost of service vs. overhead.

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