Twelve true months: how to get monthly accounts you can decide on

Once a year your accountant sends you the accounts. They cover a year that ended months earlier. They were made for the year: for the tax return, the filing, the bank. You read them and sign.

For the rest of the year you run the company on the bank balance, the order book and your own sense of how things are going.

This guide is about a second set of figures: accounts for each month, made for your decisions. It shows what they let you see, which entries make them right, how to ask for those entries, and why your accountant can make them.

What a true month lets you decide

A true picture of each month changes what you can decide, and when you can decide it.

• Prices and margin. You see what the company earned on its sales in March, in April and in May. A fall in margin shows in the month it starts, while there is still time to change a price or a supplier.
• Staff. You see what your staff cost in each month, bonuses included, before you decide on a hire.
• Good and bad months. You learn which months cover their costs and which do not. The budget and the overdraft are set with that in view.
• Cash. You can set profit beside the bank balance and see why they differ.
• Comparison. You can put this June beside last June and beside the budget, and ask about a difference while it is small.

When you sit down with your partners, or with your bank, with twelve such months, there is something to discuss. With one annual figure there is little.

The annual accounts and the monthly accounts are not rivals. The annual accounts answer for the year, once, after it has ended. The monthly accounts answer you, while the year can still be changed. Both come from the same books.

To be right, a month needs accruals

There are two ways to decide which month a cost belongs to.

The first follows the paper. A cost is recorded when the invoice arrives or the payment is made. Insurance invoiced in January is a January cost. The Christmas bonus is a December cost.

The second follows the work. A cost belongs to the months that used it. The insurance covers twelve months, so each month carries one twelfth. Staff earn the Christmas bonus as they work, so the months they worked carry it. Accountants call this the accrual basis.

An accrual is the entry that moves a cost into the month it belongs to. The same rule holds for a sale: it belongs to the month the goods were delivered.

Over a full year the two ways arrive at the same profit, once the year-end entries are made. Within the year they give different months. The example shows how different.

One company, the same year twice

The company below is invented. It describes no client, and its figures were chosen to be easy to follow.

It is a wholesaler with 30 staff and sales of €6.0 million a year. To keep the example simple, it earns 30 percent on every sale after the cost of the goods. An ordinary month's payroll costs €60,000, employer contributions included. Rent, transport and other running costs are €43,000 a month.

Four things differ between the two views.

1. Holiday bonuses and leave allowance. By law the Christmas bonus is one monthly salary and the Easter bonus is half. The leave allowance is up to half a monthly salary; here it is half. That makes fourteen salaries a year. In the first view payroll is €60,000 in nine months, €90,000 in April and in July, and €120,000 in December. In the second view it is €70,000 every month.
2. Depreciation. The cost of equipment and vehicles is spread over their lives: €96,000 a year. The first view records it once, in December. The second records €8,000 a month.
3. Insurance and licences. The calendar year's insurance, €36,000, is invoiced in January. The calendar year's software licences, €12,000, are invoiced in February. The second view carries €4,000 a month.
4. Goods. The first view charges goods in the month they are bought. The second charges the cost of the goods sold in the month, 70 percent of its sales. Over the year the company buys what it sells, with one exception: in April it buys €100,000 more than it sells, ahead of the summer, and €50,000 less in each of June and August. The two views differ in those three months and nowhere else.

The figures are operating profit, before interest and tax, in thousands of euros.

The year is €300,000 both times. Not one month is the same.

Nothing in the first view is a mistake. These books were kept to get the year right, and they do. Nobody asked them for a true March. The monthly entries are missing for that reason, and it is a request you can make.

Now read the first view month by month. If your books are kept this way and you ask for a monthly profit figure from them as they stand, the first column is the figure you receive.

• The year looked better than it was. At the end of November the first view shows a profit of €403,000 for eleven months, before interest and tax. The company has earned €269,000. December then shows a loss of €103,000, in a month that earned €31,000. The eleven-month figure overstated what the company had earned by €134,000, and no month could be compared with another.
• A good month looked like a loss. April shows a loss of €83,000 after March's profit of €41,000, on higher sales. The owner asks what went wrong in April. Nothing did. April earned €25,000 against March's €19,000. The Easter bonus and the summer stock were charged to it.
• A losing month looked like the best of the year. August shows a profit of 61. It lost 11. The goods sold in August had been bought and charged in April. August does not cover its costs, and that is a fact to know before the budget and the overdraft are set. In a book kept the first way, any change in the stock held at the year end would land in December as well, beside the depreciation. It does not by itself say whether to close in August. Rent, payroll and depreciation continue during a closure, so that decision needs to know which costs stop.

How to approach accruals: seven steps, in order

This is a list you can hand to your accountant. Each step says what information it needs. The information sits in the company or with the accountant.

1. Fix the cut-off. Choose a fixed day in the following month by which the month is closed. Post every sales and purchase invoice that belongs to the month. Goods delivered in the month and invoiced after it belong to the month. Agree the bank account to the bank statement. Needs: invoices, delivery notes, bank statements.
2. Spread the bonuses and the leave allowance. Add to each month the share that staff earned in it. On fourteen salaries a year, that is one sixth of the month's ordinary payroll. When a bonus is paid, it comes out of the amount already set aside and is not charged again. Needs: the payroll file.
3. Book depreciation each month. One twelfth of the year's charge. Needs: the asset register kept for the annual accounts.
4. Spread what is invoiced once a year. Insurance, licences, subscriptions, annual maintenance contracts. Each goes on a list with its amount and the months it covers, and each month takes its share. Needs: the policies and contracts. The list is made once and updated when one renews.
5. Add costs used and not yet invoiced. Electricity, telephone, freight, professional fees, interest on loans. Needs: last month's bills, the contracts, the loan agreement.
6. Set the cost of goods sold. The month carries the cost of what it sold, not of what it bought. Needs: the quantity and cost record described under Stock.
7. Read the month before it goes out. Compare it with last month and with the same month last year. Where an invoice has arrived for something estimated last month, put the difference in this month.

Your part. Send the documents the company holds, the invoices, delivery notes, policies and contracts, by a fixed day each month. Name one person who answers the accountant's questions. The closing day depends on both.

How you check it. Ask to see, with each month, the balances these entries leave: the bonuses set aside, the costs paid ahead, the costs not yet invoiced, the stock. In the example the bonuses set aside stand at €30,000 at the end of March, €10,000 after the Easter bonus is paid in April, and nil at the end of December.

Why it is easy

Your accountant knows every one of these entries. The annual accounts are closed with all of them but one, and that one, the bonus share, is a single line. A monthly close is the same work on smaller numbers. Most of it is set up once and then repeats.

So this is not a project. It needs no new accounting standards and no new chart of accounts. The one thing it may need is the stock module of the software the company already has. Our August 2025 article, Beyond compliance, described the whole structure of financial infrastructure that serves decisions. The monthly close is the piece you can start without any of the rest.

Three of the entries are set up once and then repeat: the bonus share, depreciation and the annual list. Each is the same journal every month with new amounts. The cut-off is not a journal. It is the routine already followed for 31 December, kept to a fixed day each month.

Two entries need more than a journal. Each has a plain way.

Costs not yet invoiced

Use last month's bill, adjusted if activity changed. Suppose electricity was put in at €5,000 and the bill comes in at €5,400. The extra €400 goes into the next month. The old month is not reopened. By the year end the invoices have replaced the estimates.

Stock

Stock is the one entry a monthly close cannot make from invoices alone. A month should carry the cost of what it sold, not of what it bought. The answer is a system, and then a check on the system.

The system. Keep a record of the quantity of each item that comes in and goes out, and the cost of each unit. The invoicing or ERP software the company already uses can hold it. Each sale takes the cost of its goods from the record. Add those costs and you have the month's cost of sales. Sales less cost of sales is the month's margin, and you read it without a count. The company uses one cost method for similar items, first in first out or weighted average, and keeps to it.

Much of the raw material already exists. Since December 2025 delivery notes are sent digitally to the tax authority's myDATA platform, so the quantities that move in and out of the company are recorded as they move. The work is to have the company's own software keep them, with a cost against each.

The check. Count part of the stock each month and compare the count with the record. Investigate each difference: goods received wrongly, wrong units, goods used and not recorded, returns, entries in the wrong month, losses. Correct the record, remove the cause, and book the difference in the month you find it. Count in rotation, so that over the year every group has been counted. This is what the year-end count did once a year. Done in parts, it tests the record all year.

If there is no such record yet. Start there, before anything else in this section. Until it runs, the cost of goods in a month is a guess, and a month of heavy buying shows as a loss, as April did in the example.

If you sell services. You hold no goods. The equivalent is work done and not yet invoiced. Keep a monthly list by project: work done to date, invoiced to date, cost to date. Revenue belongs to the months in which the work was done.

What the owner reads now

Take the second profit column of the table and read it as an owner would.

• The real cost of staff. Payroll is €70,000 a month, not €60,000. Each person costs fourteen monthly salaries a year, plus contributions, and each month shows a twelfth of it.
• Which months cover their costs. June and October are the best months, at €43,000 each. January barely breaks even. August does not cover its costs.
• Last year and the budget. A budget split into months can be compared only with months measured the same way. A December that carries a year of depreciation compares with nothing.

The same column explains the bank balance. Take the April of the stock example, when the company bought €450,000 of goods and sold goods that cost €350,000. Your customers probably pay in 60 or 90 days, which adds one more line. To keep to the example's figures, suppose for April that everything was paid in the month. In thousands of euros:

April earned a profit and the bank balance fell by €83,000. Each line says why. Notice that the first view in the table shows April at exactly that figure, a loss of 83. Books that follow the paper show you the cash. They do not show you the month. Customer invoices not yet paid are a further line of the same kind. So is the capital part of a loan repayment, which lowers the bank balance and is not a cost.

What it asks

It asks for a fixed day each month, and for keeping to it. It asks you to send the company's documents by that day. It asks for a few estimates, made the same way each time, and the habit of correcting an estimate in the following month. A month closed this way is true to within those few estimates. It also takes some of your accountant's time each month, and that time is fair to pay for.

Questions for your accountant

1. Do our monthly books carry the holiday bonuses and the leave allowance in the months staff earn them, or in the months we pay them?
2. Is depreciation booked each month or once a year?
3. Which costs are invoiced once a year, and are they spread across the months?
4. When an invoice for March arrives in April, which month receives it?
5. How do we arrive at the cost of goods sold in a month, and when was the last count?
6. Does our software value each sale at cost as it happens, and can a month's costs be locked once the month is closed?
7. By which day of the following month could you close a month with these entries?
8. Which of these entries need information from me or from my staff?

No answer to these questions is a fault. Books kept the first way serve the annual accounts well. You are asking for something more.

When you do not need outside help

If your accountant answers these questions and agrees a closing day that fits around the monthly VAT and payroll deadlines, you need nothing more. The person who closes your December can close your June.

Start with October, and with three entries: the bonus share, depreciation and the annual list. They rest on the payroll file, the asset register and a list of contracts that is made once. Because the year is already under way, the first month also takes one opening figure: the bonuses staff have earned so far and not yet been paid. In the example that is €30,000 at the end of September. Close October in November and read it together with your accountant before the December decisions. Do the same for November and December. After that quarter, add the costs not yet invoiced, and turn on the stock record if the company does not keep one.

Fortivis builds and runs monthly reporting for companies, and that is why we write about it. If you and your accountant want a second reader for the first month, write to me through the link below.

Sources

• Joint Ministerial Decision 19040/1981 and Law 4504/1966, article 3. They support the bonus amounts: a Christmas bonus of one monthly salary, an Easter bonus of half, and a leave allowance capped at half a monthly salary.
• Law 4308/2014, article 20, paragraph 7. Stock is costed by first in first out or weighted average; the last in first out method is not permitted.
• Independent Authority for Public Revenue, decisions A.1122/2024 and A.1094/2026. Digital issue and transmission of delivery notes, mandatory for all liable entities from 1 December 2025.