Month-end doesn’t have to mean month-end madness.
For property managers and accounting teams, closing the books each month involves much more than reconciling a bank account and running financial statements. You need to make sure tenant charges are accurate, vendor invoices are recorded, expenses are properly classified, security deposits are reconciled, and owner reports are ready to go.
A consistent property management accounting month-end process can help prevent errors, improve financial reporting, and make it easier to identify problems before they become bigger issues.
Whether you manage a single commercial property or a large portfolio, this property management accounting month-end checklist will help keep your books organized and your close process on track.
Why Is Month-End Accounting Important for Property Management?
Month-end close is one of the most important processes in property management accounting.
Property owners rely on accurate financial statements to understand how their properties are performing. Property managers rely on accurate accounting to make informed decisions about expenses, cash flow, maintenance, leasing, and distributions.
A proper month-end close helps ensure:
- Income is recorded in the correct period
- Tenant balances are accurate
- Vendor expenses are properly recorded
- Bank accounts are reconciled
- Accruals and prepaid expenses are properly accounted for
- CAM and other tenant recoveries are tracked
- Security deposits are properly recorded
- Owner financial statements are accurate
- Budget-to-actual variances can be identified
- Accounting errors are caught before they carry into future periods
The goal isn’t simply to close the books.
The goal is to close them accurately.
1. Complete Your Bank Reconciliations
Start your month-end close by reconciling all applicable bank accounts.
This may include:
- Operating accounts
- Security deposit accounts
- Reserve accounts
- Property-specific accounts
- Escrow accounts
Review outstanding checks, deposits, bank fees, interest, and any unusual transactions.
Don’t simply accept the reconciliation as complete if there are old outstanding items or unexplained differences.
Month-End Tip
Investigate old reconciling items.
An outstanding check from two years ago shouldn’t simply continue appearing on every monthly reconciliation without investigation.
2. Review Accounts Receivable and Tenant Accounting
Tenant accounting is a major part of commercial property accounting.
Before closing the month, make sure all tenant activity has been recorded correctly.
Review:
- Monthly rent charges
- CAM charges
- Property tax recoveries
- Insurance recoveries
- Utility charges
- Miscellaneous tenant charges
- Tenant payments
- Credits
- Unapplied cash
- Delinquent balances
- A/R aging
You should also reconcile the tenant subledger to the general ledger.
Month-End Tip
Run an A/R aging report every month and look for balances that are unexpectedly increasing or remaining outstanding.
A growing tenant balance can be an early warning sign of a collection problem.
3. Complete Your Accounts Payable Review
Make sure all invoices received for the month have been entered and properly coded.
Review each invoice for:
- Correct property
- Correct GL account
- Correct accounting period
- Proper approval
- Duplicate entries
- Appropriate expense classification
You should also identify services that were received during the month but have not yet been invoiced.
These expenses may need to be accrued.
Month-End Tip
Don’t wait until year-end to think about accruals. Monthly accruals create more accurate monthly financial statements and make year-end close much easier.
4. Review Property Expenses
One of the most valuable parts of a property management accounting month-end process is reviewing expenses for unusual activity.
Review major expense categories such as:
- Repairs and maintenance
- Utilities
- Landscaping
- Janitorial
- Security
- Insurance
- Property taxes
- Management fees
- Administrative expenses
- Legal and professional fees
- Capital expenditures
Ask yourself:
Does this month’s activity make sense?
If repairs and maintenance are normally $10,000 per month but suddenly show $50,000, investigate the reason.
It could be a legitimate capital project—or it could be a coding error.
Month-End Tip
Compare actual expenses against both budget and prior periods. Variance analysis can uncover accounting issues that a simple GL review may miss.
5. Review Accruals and Prepaid Expenses
Accruals and prepaid expenses can easily be overlooked during a busy month-end close.
Review:
- Monthly accruals
- Prior-period accrual reversals
- Prepaid insurance
- Prepaid property taxes
- Prepaid contracts
- Other prepaid expenses
Make sure expenses are recognized in the appropriate accounting period.
Month-End Tip
Review your accrual schedule every month rather than allowing old accruals to roll forward indefinitely.
6. Review Fixed Assets and Capital Expenditures
Commercial properties often have significant capital expenditures.
Review invoices and determine whether expenses should be:
Capitalized as an asset or recorded as a current-period expense.
Also review:
- Fixed asset additions
- Asset disposals
- Construction in progress
- Depreciation
- Capital project costs
This is especially important because capital expenditures can also affect CAM recoveries and tenant billing, depending on the terms of the lease.
7. Reconcile Loans and Debt
If the property has financing, reconcile the loan activity to the lender statement.
Review:
- Beginning loan balance
- Principal payments
- Interest
- Loan fees
- Ending loan balance
- Upcoming payments
Make sure the accounting records agree with the lender’s records.
8. Reconcile Security Deposits
Security deposits should receive special attention because they represent tenant funds and may be subject to specific lease and legal requirements.
Your month-end process should include:
- Reconciling the security deposit bank account
- Reconciling the security deposit liability
- Reviewing deposits received
- Reviewing deposits returned
- Recording applicable transfers
- Investigating discrepancies
- Reconciling tenant-level records to the general ledger
Month-End Tip
The security deposit bank balance and security deposit liability should be regularly compared. A difference should never be ignored.
9. Review Leases and Tenant Changes
Accounting needs to know what is happening operationally at the property.
Review:
- New leases
- Lease amendments
- Tenant move-ins
- Tenant move-outs
- Rent increases
- Scheduled escalations
- Free-rent periods
- Abatements
- Concessions
- Lease expirations
- CAM changes
A lease amendment that isn’t communicated to accounting can result in incorrect tenant billing.
Month-End Tip
Create a formal process between property management, leasing, and accounting so that accounting is notified promptly of every lease change.
10. Review CAM and Other Tenant Recoveries
For commercial properties, monthly review of CAM and other recoveries can make your annual reconciliation significantly easier.
Review:
- CAM billings
- Property tax recoveries
- Insurance recoveries
- Tenant pro-rata percentages
- Expense pools
- Recovery caps
- Gross-up provisions
- Year-to-date recoverable expenses
Keeping recovery information accurate throughout the year reduces the amount of cleanup required during the annual CAM reconciliation.
11. Reconcile Intercompany and Property Transfers
If you manage multiple properties or entities, don’t overlook intercompany accounts.
Review:
- Due-to/due-from accounts
- Cash transfers
- Management fee transfers
- Property allocations
- Intercompany expenses
Make sure transactions are recorded consistently on both sides.
12. Perform a General Ledger Review
Before finalizing the month, review the general ledger for anything that looks unusual.
Look for:
- Duplicate transactions
- Incorrect property coding
- Incorrect GL accounts
- Incorrect accounting periods
- Unusual journal entries
- Negative expense balances
- Suspense account activity
- Uncategorized transactions
- Large month-over-month changes
This is your opportunity to catch mistakes before they make their way into owner reports.
13. Review Financial Statements
Once your accounting entries are complete, review the property’s financial statements.
Income Statement
Review:
- Rental income
- CAM and recovery income
- Other income
- Operating expenses
- Budget-to-actual variances
- Month-over-month changes
Balance Sheet
Review:
- Cash
- Accounts receivable
- Prepaid expenses
- Fixed assets
- Accounts payable
- Security deposits
- Accrued liabilities
- Loans
- Equity
Don’t just look at the numbers.
Ask why the numbers changed.
14. Prepare Owner Reporting
Accurate owner reporting is one of the most important outcomes of the month-end close.
Before distributing reports, verify:
☐ Books are closed
☐ Bank accounts are reconciled
☐ A/R is reconciled
☐ A/P is reconciled
☐ Financial statements are reviewed
☐ Budget-to-actual variances are reviewed
☐ Cash position is verified
☐ Management fees are correct
☐ Owner distributions are calculated correctly
☐ Supporting schedules are complete
If there is a significant variance, include an explanation.
Owners don’t just want numbers—they want to understand what those numbers mean.
15. Complete Your Final Month-End Quality-Control Review
Before officially closing the accounting period, take one final pass through your checklist.
Your final review should confirm:
☐ Bank reconciliations are complete
☐ A/R is reconciled
☐ A/P is reconciled
☐ Security deposits are reconciled
☐ Loans are reconciled
☐ Intercompany accounts are reconciled
☐ Accruals are recorded
☐ Prepaids are reconciled
☐ Fixed assets are updated
☐ Depreciation is recorded
☐ Tenant charges are verified
☐ CAM and recoveries are reviewed
☐ General ledger is reviewed
☐ Financial statements are reviewed
☐ Variances are investigated
☐ Owner reports are completed
☐ Final quality-control review is complete
☐ Accounting period is closed
Download the Property Management Accounting Month-End Checklist
Want an easy checklist you can use every month?
We’ve created a printable Property Management Accounting Month-End Checklist to help property managers and accounting teams stay organized throughout the close process.
Download it, print it, and keep it with your month-end accounting procedures.
Download the Property Management Accounting Month-End Checklist (PDF)
Make Property Management Accounting Easier
Month-end accounting doesn’t have to be a scramble.
A standardized process can help your team catch errors earlier, keep tenant accounts accurate, improve owner reporting, and make your financial close more efficient.
But when you’re managing properties, tenants, vendors, maintenance, leasing, and owners, finding time for every accounting task can be challenging.
That’s where The Property Sidekick comes in.
We provide property management accounting and virtual assistance designed to help property managers stay organized and keep their accounting processes moving.
From bookkeeping and CAM reconciliations to tenant accounting, owner reporting, and administrative support, The Property Sidekick can help take the accounting workload off your plate.
You manage the properties. Let your Property Sidekick help with the numbers.
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