Month End Close Process 2023 Checklist, Guide, & Tips

month end close process

Journal entries of recurring monthly transactions must be performed at the time of the month-end close. Our solutions complement SAP software as part of an end-to-end offering for Finance & Accounting. BlackLine solutions address the traditional manual processes that are performed by accountants outside the ERP, often in spreadsheets. Understand customer data and performance behaviors to minimize the risk of bad debt and the impact of late payments. Monitor changes in real time to identify and analyze customer risk signals. Transform your order-to-cash cycle and speed up your cash application process by instantly matching and accurately applying customer payments to customer invoices in your ERP.

  • Following this monthly checklist will help keep your accounting organized and streamlined, making the month-end a breeze.
  • You should make sure that every transaction has been accounted for in the journal entries (including debit and credit transactions).
  • As a small business owner, you may find yourself struggling to keep up with your business’s books.
  • Preparation plays a role in the speed and accuracy of the month-end close.
  • In fact, the tasks may be spread across regions, and with the rise of remote working, you’ll need to communicate more than ever so that everyone is looped in.

It is incredibly challenging for one to ensure that all the figures in the report are accurate while working fast to meet the deadline. However, there are some ways that you can improve the result of your close process. Other than the sizable amount of work to do, managing the process and data make this procedure even more challenging.

What are Month End Closing Process Best Practices?

At the end of every month, a business needs to review its accounts to ensure it has properly recorded and reconciled all of the transactions that have taken place during that specific month. This helps to ensure all accounting data is organized, accurate, and complete. In turn, this simplifies and streamlines a number of other accounting procedures, including month-end for each month to come and the annual version of month-end known as year-end close. So most finance teams also close the books each month, letting them check transactions, journals, and reports on a more regular basis. It also means matching both income and expenses to the physical records – checking receipts, invoices, and other documents.

  • These are some common ways to use SaaS accounting software, financial close software, and other tools to automate aspects of your month-end close process.
  • To keep your accounting books as accurate as possible, you need to stay organized.
  • This handy tool ensures you complete all the necessary tasks before the end of the month.
  • Vasco noted how Mosaic has been instrumental in building out quarterly board decks and running flux analysis to compare financials period over period.
  • The accounting department often takes a lot of time to complete the month-end close process.
  • Has a customer not finished a payment yet, or have you forgotten to send an invoice?

Prior to founding FloQast, he managed the accounting team at Cornerstone OnDemand, a SaaS company in Los Angeles. Once you have all your numbers nailed down, you’re ready to close the books. The process is a bit different depending on whether you’re month end close process using QuickBooks Desktop or QuickBooks Online, so we’ll go through those close processes separately. Whatever accounting system you use, the following checklist covers most of the tasks that need to be completed before you can close the books.

Top 5 advantages of using a financial close solution

“Ten days after month end is a good rule before presenting close information. Small improvements made one at a time won’t rush the process but still can have a significant overall impact. Taking these simple steps before starting your month-end close process will help to ensure its success. Closing out the month’s financial books can be a tedious and often stressful undertaking for an accountant. Many things need to be accounted for, and the process requires accuracy, attention to detail, and precision to ensure that the books are auditable and balanced. This first step is crucial because it’s about setting your numbers straight.

month end close process

Streamlining the process also means teams can address any issues early in the closing process rather than waiting until after all data has been posted. As you can see, with the progression of time and evolution of technology, the account close process can be shortened. With automation solutions, you don’t have to sacrifice accuracy for speed because you gain both when using financial automation software. While it involves many necessary steps, you can make the most out of automation solutions that will execute them for you. This way, your finance professionals can focus on strategic and high-level tasks and problem-solving, rather than having to deal with data collection, data transformation, and manual reporting. The month end closing process consists of collecting all financial information and statements for reconciliation and reporting at the end of each month.

Record accruals

Once all the data is collected, accountants are then stuck having to procure it all in a consistent format for usability. The bigger the company and the broader your departments, the harder it will become to streamline communications and the transfer of data through multiple hands. Document the depreciating value of fixed assets and any outdated inventory. We are the American Institute of CPAs, the world’s largest member association representing the accounting profession. Today, you’ll find our 431,000+ members in 130 countries and territories, representing many areas of practice, including business and industry, public practice, government, education and consulting. To get started, take a step back and thoroughly evaluate existing close procedures.

Thanks to automation, there will be no need to constantly monitor each task and notify responsible individuals of the next steps. Since month-end closing is a routine activity, every time you encounter a roadblock or problem, note it down and try to address it effectively. For example, if collecting data takes more time than planned, try to keep everything organized throughout the month. Before you begin month-end close, it’s important to review the forecast and budget. This will give you an idea of what resources are available for the next quarter, as well as where they’re allocated. You’ll also want to review actuals from this past month so that you can compare them against your forecasts and budgets for future months in order to make adjustments where necessary.

A More Refined Approach To Accounting

And some firms practice the annual version known as the year-end close. Refocus your teams on analysis by replacing repetitive, spreadsheet-heavy work with leading-practice automation. Centralize data and close activities, automate journal entries and reconciliations, strengthen controls, and enhance visibility.

  • When you have reconciled all accounts and ensured that your general ledger is up-to-date, then you’re ready to prepare financial statements.
  • Fixed assets—which can include equipment, property, and vehicles—add long-term value to your business.
  • Having a system where only authorized employees are allowed to access the documents is essential.
  • HighRadius’ Autonomous Accounting can help your business make the month-end closing process faster, smoother, and error-free.
  • However, they also would likely prefer everything to be streamlined so that nothing slips through the cracks.
  • Journal entries for depreciation and amortization need to be calculated and posted.

It’s crucial for helping you make short-term decisions, in addition to helping you work towards long-term goals. Plus, having accurate monthly reports makes your year-end close much simpler. If you want to learn more about how Mosaic helps finance and accounting teams assume a more strategic role in the business, reach out for a personalized demo. Or, download this month-end close checklist template and put yourself on the path to a 5-day close.

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