Month End Close Process 2023 Checklist, Guide, & Tips

Closing entries or books at the end of the accounting periods helps the company to take a sneak peek into the past and focus accordingly on the next period. By hand, closing entries is a complex process, but accounting software has made it simple. A typical accounting cycle involves earning, spending, tracking transactions, and then creating reports to get a sneak peek about all those transactions.

The financial close process identifies areas that need improvement. Double-check your reports once more and then deliver them to the executive teams for reviewing and analysis. If the cash is in transit, note its destination and relationships. We recommend double-checking all payment accounts to ensure everything is organized and properly pooled.

Prioritize team collaboration

The month-end close is an accounting procedure that finalizes and closes out all financial activity for a business for the preceding month. This timeframe represents a well-defined period for accounting purposes. The process involves reviewing, documenting, and reconciling all financial transactions for that period.

As the client base and financial portfolio of an enterprise expand, manual monthly account closure can become unwieldy and impossible without automation. Excerpt from Season 1, episode 22 of Friends – “Bossman” Bing setting deadlinesThe quantum of work, its tedious nature, and deadlines can be stressful for accountants and financial professionals. The demands on attention and time are increased further by the need to perform regular responsibilities in addition to the close reconciliations. Finally, when all of the above steps have been completed, the books can be closed. Once this is done, no one can make any changes to the general ledger. Setting up a saved search to look for negative inventory items well before period end can save time at closing.

Why BlackLine Is Different from Other Month-End Close Platforms

With automation, you can also schedule tasks in advance based on dates, times, or triggering actions. Document the depreciating value of fixed assets and any outdated inventory. Now that you have this checklist, you’ll never worry about forgetting a step during your month-end close again. Extensive training of all professionals involved in the closing process can ensure clarity in roles and responsibilities. Errors in account reconciliations are not caught early on and snowball into complicated mistakes that are harder and time consuming to fix. Reporting/archiving – The final step produces all the reports and statements for stakeholders, and archive all the data.

Specifying a timeframe for your month-end-close is impossible because every business is unique. In general, the month-end takes 5-10 days, according to the surveys and research conducted over the years. The process of reconciliation compares transactions and payments between businesses with. This data ultimately gives your team, as well as management and investors, the information they need to understand the company’s current financial picture in order to make informed decisions. A lot of time is saved if the month-end software is from an intuitive software source and vetted by professional accountants. An efficient month-end close system is one that is developed by actual accountants who know better the needs of other accountants.

Review All Financial Statements

If all goes well, the close is a routine process that does not attract much attention from management or business owners. But it’s a completely different story if the numbers are late—or wrong. Speeding up the headache that is the month-end close is a finance team’s dream. Fewer days spent in consolidation, forecasting, and reporting can help the FP&A team work on other projects that have been pushed off for so long.

If a company waits until the end of the year to review financial data, the information is often stale and much less useful. The final trial balance will only contain balance sheet entries since you’ve already zeroed out income and expense accounts. You should check again if the total debits and credits agree to ensure your general account ledger balances are accurate. Your books are ready for the next accounting cycle if everything is in order. Accounting systems automate the process of closing entries within a few clicks, but this is only possible with accurate recording of transactions.

Why Should You Use a Month-End Checklist?

For example, an eCommerce company tracking inventory will have a slightly different month-end checklist from a SaaS company with purely digital products. You can do this by looking at the Journal report and filtering the posted date for the month you’re about to close. You can also check the journal statuses to see if any are still marked as drafts.

Match, analyze, and reconcile millions of transactions in minutes.

Cash Forecasting Software

Proper record-keeping is key to creating a good accounting system. With up-to-date records, you will save time catching up with your financials during the month-end process. Staying on top of your numbers and closing your books every month is important to keep your business on the right track. By preparing ahead for the month-end, you’ll avoid the last-minute rush and have a smooth closing process.

And best of all, it can help prevent those dreaded last-minute scrambling sessions that often lead to mistakes. Hopefully, this article has given you a better understanding of the month-end close process. The key takeaway is that there are many different steps involved in closing out the books at the end of each month. While some may seem simple, others require more time and effort on your part as an accountant or bookkeeper.

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• Invest in developing a fully integrated software environment to slash the “grunt work” of tedious manual workflows and eliminate obstacles like rogue spend, fraud, and human error.
• Automation software can help you better track accounts payable throughout the month so that there’s less pressure on you as the fiscal calendar turns.
• Accounting close process or a month end close process must be carefully carried out to make sure that the accuracy of your business’ financials isn’t compromised.
• This article will explain the standard procedures for doing month-end and quarterly book closing.
• This can include revenue that has been earned but not yet invoiced or received, as well as expenses that have been incurred for which bills have not yet been received or paid.
• And each step is created to make sure that every penny is accounted for and that the financial reports are accurate.

The how to calculate sales tax-end close checklist is a financial and operational review of your performance throughout the month. Ideally, some items on your checklist are related to your financial accounting system and some will be related to your management system . You want to close out a month so that you have a solid record of what happened during that month, with no chance of numbers moving around or shifting after the fact. If you have buy-in from the rest of the organization, now is the time to think about how you can optimize workflows and processes across your business to help your finance team accelerate your close.

Track the condition of these assets and record any expenses related to them. Of course, you should account for purchases when you review fixed assets too. Review amortization and asset depreciation in this step as well. The team must manually upload data to the accounting system for the accounting department to process month-end goals. Unfortunately, this process is time consuming and error prone, so finding an automated solution is essential.

Depending on the size of the company, its cycle is made up of five to nine steps. And each step is created to make sure that every penny is accounted for and that the financial reports are accurate. A bank reconciliation statement summarizes banking and business activity by reconciling a business’s bank account with its financial records.