The monthly books close for a $1M–$5M restoration company on QuickBooks Online is a 28-step procedure run across 4 phases: Phase 1 Bank & Credit Card Reconciliation (steps 1–6), Phase 2 AR & Insurance Receivables Cleanup (steps 7–13), Phase 3 Job Cost & Revenue Recognition (steps 14–20), and Phase 4 Reporting & Owner Review (steps 21–28). Total hands-on time is roughly 4–6 hours, and the target is to lock the books by the 10th of the following month. The two phases that make restoration close different from a generic close are the ACV/RCV receivable split (step 8) and the WIP schedule update (step 15).
The Monthly Books Close SOP for Restoration Companies (28 Steps)
A restoration close is not a generic small-business close with the logo swapped. You are reconciling two-party checks, splitting receivables into ACV and RCV holdback, updating a work-in-process schedule, and tying billed equipment days back to drying logs — none of which exist in a retail or services close. This SOP is the exact, print-it-for-the-new-hire procedure for closing the books at a $1M–$5M restoration company on QuickBooks Online, in 28 sequential steps grouped into 4 phases.
It assumes accrual accounting and references the revenue-recognition logic that flows from the IICRC S500 job lifecycle (mitigation → reconstruction → certificate of completion → RCV release). The whole close should take 4–6 hours of focused work and must be locked by the 10th of the following month. The owner only joins at the end, for the review and sign-off — everything before that is executed by the bookkeeper or controller. If you only fix one thing about your current close, make it the deadline: a close that drifts past the 15th is a close that nobody trusts.
Prerequisites
- QBO admin access with permission to set a closing date and password.
- Class tracking enabled and used per job (see QBO class tracking for restoration).
- All bank, credit card, merchant, equipment-loan, and LOC statements for the close month, downloaded.
- An estimating export (Xactimate or Symbility) for every open and recently completed job.
- The payroll register for the period and your current labor burden rate.
- Equipment day logs for the month (from your asset-tracking app or manual sheet).
- The prior-month close file and WIP schedule to roll forward.
- Working knowledge of restoration accounting terminology — ACV, RCV, WIP, supplement, takedown.
Materials & Tools Required
| Item | What it is / example | Used in | |---|---|---| | QuickBooks Online (admin) | Set closing date, run reports | All phases | | Bank / CC / LOC statements | Operating, AmEx/Visa, equipment loans, LOC | Phase 1 | | Merchant statement | Stripe / Square / processor payout report | Phase 1 | | Estimating export | Xactimate or Symbility scope + supplements | Phases 2–3 | | Payroll report | Gusto / ADP register + burden rate | Phase 3 | | Equipment day log | DAT app / manual drying log | Phase 3 | | WIP spreadsheet | Costs, % complete, billings per open job | Phase 3 | | Prior close file | Last month's locked reports + WIP | Phases 3–4 |
Estimated cost: $0 — software you already own. Total time: ~PT5H (4–6 hours). Deadline: books locked by the 10th.
You close on time, not when the money arrives. A restoration company runs on accrual accounting and a WIP schedule precisely so the books can be locked by the 10th while insurance, supplement, and holdback cash is still in flight.
Phase 1 — Bank & Credit Card Reconciliation (Steps 1–6)
Phase 1 ties every cash and debt account to its statement: operating bank, credit cards, the merchant processor, equipment loans, and the line of credit, then lists anything that didn't clear. Until cash is reconciled, no downstream number can be trusted. Budget about 60–90 minutes.
Reconcile the operating bank account
20 minPull the operating account statement and reconcile it in QBO. Confirm every deposit ties to a remittance (carrier, TPA, or retail) and that no deposit is sitting in Undeposited Funds unmatched. The ending cleared balance must equal the statement exactly before you move on.
Reconcile the credit card account(s)
15 minReconcile every company card and employee card to its statement. The common restoration failure here is materials bought on a card never getting coded to the job — confirm each job-related charge carries the correct class. Fuel, lodging, and per-diem on out-of-town jobs are job costs, not overhead.
Reconcile the merchant / processor account
10 minTie the card processor's payout report (Stripe, Square, or your portal) to the bank. Gross revenue must hit revenue and the processing fee must hit a fee expense — never record only the net deposit, or you understate both revenue and expense.
Reconcile equipment financing account(s)
10 minFor each equipment loan (dehumidifiers, air movers, trucks), reconcile the liability balance to the lender statement and confirm the monthly payment splits into principal (balance sheet) and interest (expense) per the amortization schedule. See equipment tracking & recovery SOP for how the asset side ties in.
Reconcile the line of credit
10 minReconcile the LOC to its statement: every draw, every paydown, and the interest charge. Note the available balance — you'll need it for the cash position report in step 25. Restoration companies lean on the LOC to float receivables, so this account moves every month.
Identify and list unreconciled items
15 minProduce a single list of everything that did not clear: outstanding checks, in-transit deposits, and stale transactions. Write a one-line disposition for each (will clear, void, or research). Outstanding items older than 60 days are the canary for a process leak — see hidden profit leaks.
Phase 2 — AR & Insurance Receivables Cleanup (Steps 7–13)
Phase 2 is where restoration close diverges hardest from a generic close. You bucket AR by job stage, split each receivable into ACV and RCV holdback, reconcile the supplement pipeline and TPA remittances, track two-party checks and mortgage holds, and flag write-offs. This is the most time-consuming phase — budget 90–120 minutes.
Review AR aging by job stage
20 minRun the AR aging detail and classify each balance by job stage, not just by days. A 75-day balance that is an unreleased RCV holdback is normal; a 75-day balance on a completed retail job is a collection problem. See AR days outstanding for restoration for the buckets.
Reconcile ACV vs RCV receivables
20 minFor every insurance job, split the receivable: the ACV is the first release (typically 60–70% of the approved estimate) and the RCV holdback is the recoverable depreciation released after completion. The holdback must not be billed until the certificate of completion is in. Forgetting to bill RCV is one of the largest silent losses in restoration — define the terms via the restoration insurance glossary.
Review the supplement pipeline
20 minReconcile the supplement log in the estimating system against QBO. Approved scope gets invoiced and recognized; pending scope stays off the ledger on a tracking list. Never book pending supplement revenue. This is the exact gap covered in why supplements disappear between Xactimate and QuickBooks and the supplement filing & tracking SOP.
Check two-party check status
10 minList every two-party (insured + contractor) check and note where each one is. Two-party checks are a frequent reason a receivable looks unpaid when the money is actually stuck waiting on the insured's signature. Chase any check sitting more than 30 days.
Review mortgage-company hold items
10 minIdentify receivables where the loss check is endorsed to a mortgage company and released in draws tied to inspections. Record the draw status for each. These balances are legitimately slow but should still be actively managed — a stalled inspection is a cash-flow event, not a write-off.
Reconcile TPA payments
15 minMatch every TPA remittance statement to the job it pays. Book the takedown / program fee explicitly as contra-revenue or a fee expense so gross revenue stays accurate and you can measure program profitability — see the code-blue test for TPA programs.
Flag write-off candidates
10 minCompile receivables that are genuinely uncollectible or stale into a write-off candidate list with the dollar amount and reason. Do not post any write-off — that requires owner sign-off in step 27. Pre-approved write-offs only.
Phase 3 — Job Cost & Revenue Recognition (Steps 14–20)
Phase 3 trues up the income statement: confirm which jobs are open, update the WIP schedule, recognize revenue on completed jobs, allocate all direct costs, post labor burden, reconcile equipment days, and verify subcontractor payments. This is what makes the P&L tell the truth. Budget 90–120 minutes.
Review all open jobs
10 minRun the job/project list and reconcile it against the field system. Close out ghost jobs (open in QBO, done in reality) and open any job that has costs hitting it but no setup — see the insurance job setup SOP for the correct structure.
Update the WIP schedule
25 minUpdate the work-in-process schedule for every open job: costs incurred to date, estimated percent complete, and billings to date. The over/under-billing column is the heart of restoration revenue recognition. See the job costing pillar guide for the full method.
Recognize revenue on completed jobs
15 minFor every job that crossed the finish line this period, recognize the earned revenue per the WIP schedule and clear it from WIP. A completed job whose costs blew past the estimate is either a supplement opportunity (back to step 9) or a margin loss to flag in step 24.
Allocate COGS to jobs
15 minConfirm all direct costs are allocated to jobs via class so COGS matches recognized revenue. The four cost categories — labor, materials, subcontractors, equipment — must each land on the right job; see the four cost categories of a restoration job P&L. Anything in the unassigned bucket distorts every job's margin.
Post labor burden
15 minCalculate labor burden (payroll taxes, workers' comp, benefits) as a percentage of raw wages and post it to job cost so each job reflects true labor cost — typically 20–35% on top of base wages. Without burden, every job looks more profitable than it is and your pricing decays. Cross-check against the job-costing pillar guide.
Reconcile equipment days
15 minReconcile billed equipment days against the equipment log and the estimate line items for each drying job. Unbilled days are margin walked off the truck; over-billed days create audit and supplement risk. Make this a habit, not a scramble — see the equipment-day reconciliation habit.
Review subcontractor payments
15 minConfirm every subcontractor invoice is matched to a job, carries the right class, and that the sub has a current W-9 and (on reconstruction) a lien waiver. Track any retainage withheld. Misallocated sub costs are a top cause of phantom job profit.
Download This SOP as a Printable PDF
Use it as a real internal training document for new hires.
Phase 4 — Reporting & Owner Review (Steps 21–28)
Phase 4 turns clean data into decisions: a preliminary P&L scan, gross margin by service line, AR days outstanding, the top 10 unprofitable jobs, a cash position report, the owner review package, sign-off, and the lock. The owner only joins for steps 26–27. Budget 60–90 minutes, then lock by the 10th.
Run a preliminary P&L review
10 minRun the period P&L side-by-side with the prior month and scan for anomalies before producing anything final. A zero in a normally-active account or a negative expense almost always means a coding error from an earlier phase — fix it now, not in the owner meeting.
Calculate gross margin by service line
15 minBreak revenue and COGS out by service line and compute gross margin for each. Mitigation, contents, and reconstruction carry very different margins; blending them hides problems. Compare against restoration profitability benchmarks and the profit-levers guide.
Calculate AR days outstanding
10 minCompute DSO from the closed AR balance and revenue, then compare to your trend. A rising DSO that is not explained by RCV holdbacks or mortgage draws is an early collections warning — drill back into the step 7 buckets. Methodology in AR days outstanding for restoration.
Flag the top 10 unprofitable jobs
15 minSort jobs by gross margin and list the 10 worst, each with a one-line cause: under-scoped, unbilled supplement, blown labor, missed equipment days, or bad estimate. Recurring causes are process problems, not job problems. Learn to read these in how to read a job-level P&L.
Produce the cash position report
10 minSummarize cash on hand, LOC availability, and near-term obligations into a one-page snapshot. This is the bridge from the close into the 13-week cash flow forecast — the close tells you where you are, the forecast tells you where you're headed.
Prepare the owner review package
15 minAssemble every output into one package — ideally a saved QBO report group exported to a single PDF. Add the write-off candidate list from step 13. Keep it to one document; the review is for decisions, not a treasure hunt. The owner's reading order for the monthly P&L sets the agenda.
Hold the owner review and capture sign-off
30 minWalk the owner through the package, capture decisions on write-offs and flagged jobs, post the approved write-offs, and record explicit sign-off. Separating execution (steps 1–25) from approval (step 27) is what keeps the close honest. See the complete restoration financial management guide.
Lock the books
5 minSet the QBO closing date to the last day of the month and turn on the password so no one can post into the closed period. Archive the close package and the WIP schedule for next month's roll-forward. The books are now locked — ideally by the 10th.
| Business day | Phase / steps | Owner | Deliverable | |---|---|---|---| | Day 1–3 | Phase 1 — Bank & CC recon (1–6) | Bookkeeper | All cash/debt accounts reconciled; unreconciled list | | Day 3–5 | Phase 2 — AR & receivables (7–13) | Bookkeeper | Clean AR aging; ACV/RCV split; write-off candidates | | Day 5–7 | Phase 3 — Job cost & revenue (14–20) | Bookkeeper / Controller | Updated WIP; recognized revenue; allocated COGS + burden | | Day 7–8 | Phase 4 reports (21–25) | Controller | P&L, margins, DSO, top-10, cash position | | Day 8–9 | Owner package + review (26–27) | Bookkeeper + Owner | Signed-off close package | | Day 9–10 | Lock (28) | Controller | Period locked with password |
| Report | QBO path | Used in step | |---|---|---| | Reconciliation | Bookkeeping > Transactions > Reconcile | 1–5 | | Uncleared transactions | Reports > Reconciliation Reports | 6 | | AR Aging Detail | Reports > Who owes you > A/R Aging Detail | 7, 8, 10, 13 | | P&L by Customer | Reports > Profit and Loss by Customer | 15, 17, 24 | | P&L by Class | Reports > Profit and Loss by Class | 22 | | Profit and Loss | Reports > Business overview > Profit and Loss | 21 | | Balance Sheet | Reports > Business overview > Balance Sheet | 25 | | Closing date | Settings > Account and settings > Advanced | 28 |
Common Mistakes
- Closing late. A close that drifts past the 15th is a close nobody acts on. The deadline is the discipline — lock by the 10th even if a few items roll to next month.
- Booking pending supplement revenue. Only approved supplements get recognized (step 9). Booking pending scope inflates revenue and creates a reversal next month.
- Forgetting the RCV holdback. The recoverable depreciation in step 8 is real money that gets billed after the certificate of completion. Unbilled RCV is one of restoration's largest silent losses.
- Skipping labor burden. Posting only raw wages (skipping step 18) makes every job look 20–35% more profitable than it is and quietly destroys your pricing.
- Netting fees into revenue. Recording only the net merchant deposit or net TPA remittance (steps 3, 12) understates both revenue and expense and hides program/processing cost.
- Leaving costs unassigned. Any direct cost in the unassigned column (step 17) means at least one job's margin is wrong — usually the one you most need to read.
- Ignoring equipment days. Treating step 19 as optional leaves billable drying days on the truck and invites Xactimate audit findings.
- Writing off without sign-off. Posting write-offs before the owner approves (steps 13, 27) removes the control that keeps AR honest.
- Not locking the books. Skipping step 28 lets anyone backdate a transaction into a closed month and silently restate a number you already reported.
How to Adapt This SOP for Your Company
Universal — keep at every size: the four-phase order (reconcile cash → clean receivables → true up job cost → report and lock), the ACV/RCV split (step 8), the WIP schedule (step 15), labor burden (step 18), owner sign-off (step 27), and the lock (step 28). These define a restoration close.
Company-specific — adjust freely:
- Under $1M: merge the reconciliation steps; drop step 4 or 5 if you have no equipment loan or LOC; the owner may also be the bookkeeper (but still sign off in a separate sitting).
- $1M–$5M (the baseline here): run all 28 as written, bookkeeper executes 1–25, owner joins 26–27.
- $5M+ / multi-location: add steps for multiple operating accounts, intercompany eliminations, and divisional P&Ls by branch; the controller owns the close and a fractional CFO reviews margins.
- Software: if you run a restoration platform (DASH, Albi, JobNimbus) feeding QBO, add a sync-reconciliation check between the platform and QBO before step 14.
The cadence — locked by the 10th — does not flex with size.
Frequently Asked Questions
How long should a monthly books close take for a restoration company?
Budget 4 to 6 hours of focused work for a $1M–$5M restoration company on QuickBooks Online once the SOP is in place. The biggest time sinks are AR/insurance receivable cleanup and the WIP schedule. Target a hard deadline of the 10th business day after month-end to lock the books.
When should I lock the books each month?
Lock the books by the 10th of the following month, immediately after the owner signs off. Set a QBO closing date with a password so no one can post into the closed period. Locking creates the audit trail and forces late items into the current month.
How do I reconcile ACV vs RCV receivables in QuickBooks?
Track the ACV portion as the amount paid or expected on first release (typically 60–70% of the approved estimate) and the RCV holdback (recoverable depreciation) as a separate line or sub-customer balance. The holdback should only be billed once the certificate of completion is submitted. Reconcile both against the estimating system every month so the holdback is never forgotten.
What is a WIP schedule and why does a restoration company need one?
A work-in-process (WIP) schedule tracks costs incurred, percent complete, and billings on every open job so revenue is recognized as it is earned rather than when cash arrives. Without it, a restoration P&L swings wildly month to month and overbilled or underbilled jobs hide real margin. It is the single most important non-cash schedule in restoration accounting.
How do I handle supplements during month-end close?
Reconcile the supplement pipeline against the estimating system: approved supplements should be invoiced and recognized, while pending supplements stay off the ledger but on a tracking list. Never book pending supplement revenue. Use a consistent assumption (often ~70% of submitted value) only for cash forecasting, not for the books.
What should I do with two-party checks at close?
List every outstanding two-party check (insured plus contractor) and note where each is — awaiting endorsement, in transit, or deposited. Two-party checks are a common reason receivables look unpaid when the money is actually stuck. Flag any check older than 30 days for follow-up.
How do I post labor burden in QuickBooks Online?
Calculate burden as a percentage on top of raw wages covering payroll taxes, workers' comp, and benefits, then post it to job cost via a journal entry or burden item so each job carries its true labor cost. A typical restoration burden runs 20–35% of base wages. Without burden, every job looks more profitable than it is.
How do I reconcile equipment days at month-end?
Compare the equipment days billed on each drying job against the equipment day log and the Xactimate/Symbility line items. Unbilled equipment days are pure margin left on the table; over-billed days create supplement risk. Reconcile monthly so the gap never compounds.
What reports does an owner need in the monthly review?
The owner package should include the P&L, balance sheet, AR aging, WIP schedule, gross margin by service line, a one-page cash position report, and the top 10 unprofitable jobs. Keep it to one binder or one PDF. The review is for decisions, not data entry.
What is a good AR days outstanding (DSO) target for restoration?
Many restoration companies run DSO in the 45–75 day range because insurance and supplement payments lag. The goal is not a single number but a stable, downward trend versus your own history. Spikes usually trace to a stalled supplement, a held mortgage draw, or a stuck two-party check.
Who should perform the monthly close — the bookkeeper or the owner?
A bookkeeper or controller executes steps 1–25; the owner only needs to join for the review and sign-off (steps 26–27). The owner's job is to make decisions on write-offs and flagged jobs, not to reconcile accounts. Separating execution from sign-off is what keeps the close honest.
How do I handle TPA takedown fees in the books?
Book the TPA program fee (takedown) as contra-revenue or a dedicated fee expense tied to the job, never net it silently into the deposit. This keeps gross revenue accurate and lets you measure true program profitability. Reconcile each TPA remittance statement to the job it pays.
What happens if I find an error after locking the books?
If the error is immaterial, correct it in the current open period rather than reopening the closed month. If it is material, document it, get owner approval, temporarily lift the closing-date password, post the correction, and re-lock. Reopening a closed period should be rare and always logged.
Can I close the books before all insurance payments arrive?
Yes — that is exactly why restoration uses accrual accounting and a WIP schedule. You recognize earned revenue and carry the receivable; you do not wait for cash. Closing on time every month is more valuable than waiting for every check to clear.
How do I adapt this 28-step SOP for a smaller or larger company?
Smaller companies (under $1M) can merge the reconciliation steps and skip equipment financing or LOC steps if those accounts do not exist. Larger companies ($5M+) add steps for multiple bank accounts, intercompany entries, and divisional P&Ls. The four phases and the lock-by-the-10th discipline stay the same at every size.
Free 30-min Books Audit Call
We'll show you where your close is leaking time and margin — and how to get it locked by the 10th every month.
Key Takeaways
- The restoration monthly close is 28 steps in 4 phases: reconcile cash (1–6), clean receivables (7–13), true up job cost (14–20), then report and lock (21–28).
- Total time is 4–6 hours; the non-negotiable deadline is books locked by the 10th.
- The two steps that make it restoration are the ACV/RCV split (step 8) and the WIP schedule (step 15) — get those wrong and the P&L is fiction.
- Labor burden (step 18), equipment-day reconciliation (step 19), and supplement pipeline discipline (step 9) are where silent margin lives.
- Keep execution and sign-off separate: the bookkeeper runs 1–25, the owner approves write-offs and flags in 27, and the period is locked in 28.
- Recognize revenue on accrual — you close on time, not when the cash arrives.
Related reading: Monthly close ties into the 13-week cash flow forecast SOP · Insurance job setup SOP for QuickBooks · Job close-out & final AR SOP · Complete guide to bookkeeping for restoration companies · Complete guide to insurance billing & accounting · Restoration accounting terminology reference