The monthly close for a spa or medspa
The close is where the deferred balances move, the inventory gets counted and the month becomes a fact rather than an impression. Without it, every number in the business is an estimate.
The checklist
- Reconcile bank and credit card accounts.
- Reconcile processor settlements — gross sales to deposits, with fees and tips identified.
- Pull outstanding package, member credit and gift card balances from the booking system.
- Post the deferred revenue movement for each, and tie the closing balances to the general ledger.
- Count retail inventory; post shrinkage and write-offs.
- In a medspa, count injectable stock in units and post waste and expiry.
- Reconcile provider compensation to the commission report and to payroll.
- Accrue anything material that has not been invoiced.
- Review the discount and comp account against the prior month.
- Produce the reports and read them.
A close that lands on the tenth every month produces decisions. A close that lands somewhere between the fifteenth and the end of the following month produces history.
What to look at when it lands
| Number | The question it answers |
|---|---|
| Revenue per available treatment hour | Is the capacity we pay for being sold? |
| Service margin after provider cost and backbar | Does the treatment business work? |
| Retail margin and inventory turns | Is the shelf a business or a storage cost? |
| Deferred revenue balance, and its movement | How much of the bank balance do we still owe in services? |
| Net member growth and involuntary churn | Is the recurring base growing, and how much are we losing to failed cards? |
| Discounts as a share of gross service revenue | Is pricing drifting? |
| Cash on hand less deferred revenue | What is actually ours? |
That last one is the number most spa owners have never seen, and it is frequently the one that changes a decision.
Common findings in a first clean close
- A deferred revenue balance materially larger than anyone expected, usually from years of unredeemed packages and member credits.
- Service margin lower than assumed, once backbar and payroll taxes are inside cost of service rather than in overhead.
- Retail inventory well above what turns justify, with a long tail of dead stock.
- Discounting several points higher than management believed, because it was netted against revenue rather than tracked.
- Involuntary churn running at a meaningful multiple of voluntary churn.
None of these are unusual and none of them are disasters. They are the normal result of a business that grew faster than its bookkeeping, and each one is actionable the month it becomes visible.
Frequently asked
How quickly should the close land?
Ten business days is a reasonable target for a single location, five once the process is established. What matters more than speed is that the date is agreed and met, because that is what makes the numbers usable for decisions.
Do we need to count inventory every month?
Retail, monthly if it is a meaningful share of revenue. Injectable stock in a medspa, monthly without exception — the value is high and the expiry risk is real.
What if the deferred balance has never been tracked?
Establish it once from the booking system's outstanding balances, book the opening liability, and move forward from there. It is a one-time exercise and it is usually the single most valuable thing a first clean-up produces.
Which report should the owner actually read?
One page: revenue per available hour, service margin, retail margin, deferred balance, net member growth, and cash less deferred revenue. Six numbers, same order every month.
Related
Memberships and packages: what you have actually earned
Why membership and package money is a liability rather than revenue, how to move it as it is delivered, and what happens when nobody does.
Read →Utilisation: what a treatment room earns per hour
Measuring revenue per available treatment hour by room and by provider, and why it explains more than revenue or margin ever will.
Read →Getting the booking system to agree with the books
Boulevard, Zenoti, Mindbody, Vagaro and the rest: what they hand off to accounting, what they do not, and the reconciliation that has to happen either way.
Read →