Why is “the bank ties” not enough?
Because cash is only one of the things that can be wrong. A month can reconcile to the cent and still be missing loan interest, still have a payroll draft sitting in a clearing account, and still have a dozen transactions that nobody has coded.
These four checks cover what the reconciliation does not.
Check 1: does cash tie?
Every bank account and every card account agrees with its statement on the last day of the month. Not “close”. If it is off, see the six checks for a small difference.
Check 2: is anything unfiled?
No transaction is still waiting for an account. No imported line is sitting outside the books. No document has arrived that nobody has looked at.
Check 3: are the clearing accounts empty?
Payroll clearing, transfer clearing, undeposited funds and any processor clearing account all hold 0.00, or a balance you can tie to a document and have written down, such as a transfer in transit or processor payouts not yet paid. Any other balance means two records of the same money did not meet. See what a clearing account is.
Check 4: are the schedules posted?
This month’s loan payment is split into principal and interest. This month’s depreciation is in the ledger. This is the check that gets skipped, because nothing in the bank feed reminds you of it. See the loan payment entry.
What if one check fails and I have to close anyway?
It happens. A transfer is in transit. A client has not sent the loan statement. Close if you must, but write the reason down, with your name and the date, where the next person will find it. Six months later that sentence is worth more than the reconciliation.
What happens after the close?
The period is locked. Nothing in it changes quietly. If something turns out to be wrong, it is corrected with a new entry in the open period.
How does LedgerDock do this?
These are the four checks LedgerDock runs before a month can lock. They are computed from the books each time, not ticked by hand. A failing check has to be fixed, or explained in writing, and the explanation is sealed into the close. The Verify and lock tutorial shows the screen.