A common reason the month-end close gets delayed is that Finance is waiting on other teams, whether it’s overdue expense reports, open purchase orders or missing documentation. A financial close management software that automates consolidation and keeps everything on a centralized system can help. Keep track of all the steps in your month-end close with this downloadable checklist. This guide gives you that, breaking down each step to help you close faster every month, avoid surprises and deliver financials your leadership team can trust.
Treasury Management
- Automating repetitive tasks is one of the easiest ways to speed up your month-end close.
- Ricardo Cohen Pellico is a growth leader specializing in scaling go-to-market strategies.
- By automating reconciliation, businesses can reduce errors and improve efficiency.
- Then, move on to verifying that any new asset purchases are recorded, disposals are removed from the books, and post the monthly depreciation for your fixed assets.
- A streamlined month-end close is a sign of a healthy, disciplined finance department.
- The month-end close process is when finance and accounting teams finalize and close out all financial transactions for the previous month.
For starters, Brex automates receipt capture and categorization, so your teams don’t have to. And, with real-time expense tracking and automated expense reconciliation, you’ll catch any errors before they balloon into bigger problems. Plus, with auto-enforced expense policies across all entities, you’ll drive compliance automatically. Once all transactions have been reviewed and reconciled, it’s time to month end closing generate the financial statements.
Record Incoming Cash
This month-end close checklist template is a great start, but depending on your business, you might need to add some extra steps. This checklist covers the vital activities like reconciling accounts, verifying receivables/payables, posting adjustments, and preparing statements. Then, move on to verifying that any new asset purchases are recorded, disposals are removed from the books, and post Statement of Comprehensive Income the monthly depreciation for your fixed assets. Completing a monthly checklist goes a long way in bolstering compliance. Now that we have an understanding of what month-end close is and why it’s important, let’s walk through how you can implement a scalable month-end close process for your organization. Larger pieces of machinery, technology, and other assets are sometimes translated to cash in your ledger.
The complete month-end close process checklist
And consistently accurate closes and financial forecasting lead to growing client businesses. A clear owner, whether it’s the accountant or the bookkeeper, will oversee the month-end close, ensuring it’s completed accurately and efficiently. The month-end close is one of the most common and essential https://www.bookstime.com/ processes that an accounting professional completes, and yet a staggering 82% of accountants describe it as a negative experience. Month-end close activities involve gathering, reviewing, and preparing financial statements, followed by a final review.
- These monthly closes provide regular insights into your company’s financial position, enabling leaders to assess progress toward business goals, track KPIs, and identify areas for improvement.
- Back up your data using a reliable cloud-based system that can be stored securely.
- Work through your accounting systems to ensure you’re making invoice payments on time.
- Although every company is unique with respect to month-end closing, this guide should serve you well as a general framework.
- Daily checks can quickly identify and resolve discrepancies in pricing, quantities, start and end dates, and contract terms before they impact the month-end close.
Review accounts payable and accounts receivable
With your checklist as part of an automation strategy, you’ll spend less time checking boxes and more time delivering insights. In fast-paced finance, where data changes quickly and decisions depend on real-time information, a standardized checklist ensures consistency across teams, timelines, and subsidiaries. It prevents errors and delays, especially in multi-entity operations or audits. This requires that a person (or system) handles pulling together all relevant financial information, with items like the income statement, expense records, a list of transactions, and the like.
Update Depreciation for Fixed Assets
If you uncover any discrepancies, figure out the root cause and resolve it. Then, implement corrective measures to prevent similar issues in the future. Complete an inventory count and check the numbers against what you have in your books. If you find discrepancies, this is a trigger telling you that something needs to change with your processes. Reconcile deposits and receipts for this fund to ensure your petty cash balance is what you expect it to be.
Challenges Faced During Month-End Close
By sending these important reminders in advance, you can ensure greater accuracy in your month-end reports and limit the time spent managing exceptions at the end of each accounting period. These communications should include brief reminders as to exactly what needs to be done and a due date for completion. For example, it can be helpful to set parameters pertaining to employee reimbursements, wherein employees must submit expense reports by the last day of the month.
Before you begin your closing efforts, you’ll need to assemble all of the relevant documents and data you’ll need to create the corresponding financial reports. This will include any finalized reports you made the previous month, if only to create a baseline. Discover how intelligent account reconciliation slashed manual work and sped up financial close—across 59 entities and thousands of entries. Having precise and trustworthy financial data allows businesses to make informed and strategic decisions, ensuring long-term success and stability. With all reviews, analyses, and adjustments complete, the final financial statements are prepared. These reports are crucial for internal decision-making and are often required by external stakeholders such as investors or lenders.
The month-end close is crucial for an organization as it facilitates the presentation of its financial position. Additionally, a well-managed month-end close reflects the company’s and its operations’ stability. Evaluate existing manual processes to identify tasks that you could automate, then explore close accounting software solutions to find the right one for your business. For example, using a close accounting solution embedded in NetSuite eliminates context switching and allows you to automate tasks to speed up the close process. Accurate financial data is vital to ensuring an efficient and reliable close process. But manual data entry can lead to human error, and identifying and resolving discrepancies can be time-consuming when data is stored across different spreadsheets and platforms.
This can challenge the month-end close process since the accounting team will experience delays in receiving important financial statements. There’s no universal benchmark, but in general, it takes 5–7 business days for high-performing finance teams and 8–10 business days for mid-sized companies. More than 10 days typically indicates opportunities to introduce further automation into your workflows, which accelerates the process by automating handoffs, task tracking and variance analysis. The month-end close is a vital process for all businesses, regardless of size or industry. Firms must understand the steps involved, utilizing a checklist, and implementing best practices.