How to close the books for a construction company
A problem-to-playbook guide to the contractor close - from job-cost reconciliation to a posted WIP schedule - so your monthly numbers are ones a surety would trust.
Why a contractor close is different
A generic month-end close reconciles accounts. A construction close does that and then some: it has to recompute percent complete on every open job, recognize the right revenue, and post the WIP schedule so the balance sheet carries the correct contract assets and liabilities. Skip that and your income statement is fiction.
- Job costs must be reconciled and coded before percent complete is meaningful.
- Estimates at completion should be refreshed so revenue isn’t stale.
- The WIP schedule and retainage reclass are close tasks, not afterthoughts.
The contractor close, in order
Five construction-specific steps
- 1
Reconcile and code job costs
Ensure every bill, expense, and payroll line is posted and tagged to the right job and cost code.
- 2
Refresh estimates at completion
Update cost-to-complete where a code is trending off budget so percent complete reflects reality.
- 3
Run revenue recognition
Compute percent complete and period revenue per job and post the balanced entries.
- 4
Post the WIP schedule
Book contract assets (under-billing) and liabilities (over-billing) so the schedule ties to the GL.
- 5
Reclass retainage
Separate held retainage from current AR so the balance sheet shows collectible receivables.
Explain the movement
A good close ends with a narrative: which jobs drove revenue, where percent complete moved, and whether over/under billing shifted. Fintra can draft that flux narrative - naming the jobs, their percent complete, and earned revenue - so leadership gets context, not just numbers.
How Fintra runs the close
Fintra’s construction close runs pre-close checks, generates the WIP entries, reclasses retention using each job’s percent, and drafts the CFO flux narrative - with AI proposing and a person approving every posting. The result is a repeatable close, not a monthly scramble.
Frequently asked questions
What’s different about a construction month-end close?
Beyond normal reconciliations, a construction close recomputes percentage-of-completion on every open job, recognizes the correct period revenue, posts the WIP schedule (contract assets and liabilities), and reclasses retainage. These steps are what make a contractor’s monthly financials reliable.
In what order should I close a construction period?
Reconcile and code job costs, refresh estimates at completion, run percentage-of-completion revenue recognition, post the WIP schedule, and reclass retainage. Doing them in that order ensures percent complete is based on clean costs before revenue and the WIP entries are posted.
What pre-close checks matter for contractors?
Confirm every open job has an estimated total cost (percent complete can’t be computed without it) and that the contract asset and liability accounts exist so the WIP entries can post. Catching these before recognition avoids re-running the close.
Can Fintra automate the construction close?
Yes. Fintra runs the construction-specific close - pre-close checks, WIP journal entries, retention reclass, and a drafted CFO flux narrative - with AI proposing and a person approving each posting, so the close is repeatable instead of manual.
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