Month-End Close Process Overview with Flowcharts and Checklist

This way, your team spends less how is sales tax calculated time fixing errors and more time focusing on strategic tasks. Vena supports this step by giving you real-time visibility into the entire close process through its workflow dashboard. You can instantly see task status, ownership and outstanding actions without chasing updates across spreadsheets or email threads. This step involves reviewing outstanding bills and invoices, as well as vendor and customer payments, to confirm that they are accurately recorded in the subledgers and reflected in the GL. Most of this information needed for this step can be found on your income statement.

Prepare financial statements

For instance, assigning specific tasks—such as reconciling bank statements or reviewing journal entries—to designated team members reduces the risk of overlapping efforts or missed steps. Modern technology solutions have transformed month end close processes in accounting from a manual, time-consuming exercise into a streamlined, efficient workflow. By leveraging the right tools, finance teams can dramatically reduce close times while improving accuracy and control.

• SaaS is one of the most effective business models for achieving revenue growth.
• Now that we understand the significance of the month-end Close and its challenges, let’s delve into the heart of our guide—the comprehensive month-end Close checklist.
• For example, they can learn from past corrections to automatically categorize transactions more accurately over time.
• These entries are essential for accurately reflecting your company’s financial standing.
• The accounting department’s attention to detail and expertise in financial reporting are essential to the success of the month-end close process.

Top 10 automation challenges for CFOs

AI tools like Vena Copilot help FP&A teams spot variances, draft commentary and speed up reporting. Instead of spending hours on manual analysis, your team can focus on final review and strategy. Tanger Outlets used Vena to reduce their month-end close from nine days to just four and a half days.

• Start by recording all income received throughout the month, whether this is through cash, invoices, loans, or other revenue.
• Prepare and post any necessary journal entries to adjust accounts, correct errors, and reflect accounting principles.
• Every task in the month end close process should have a responsible party or team.
• This will enable you to detect any discrepancies — unauthorized transactions, bank errors, or internal mistakes — so you can close your books cleanly.
• You may want to create your own after knowing what a month-end process flowchart provides for your organization.
• This ensures that your efforts to reconcile subledgers aren’t rendered more difficult by the addition of new transactions during the process.

Month-End Close Checklist and Year-End Accountant Handoff SmartSMSSolutions

• During the bank reconciliation process, you can also post interest income, bank fees, or other adjustments that impact your cash balances.
• Additionally, NetSuite’s period close dashboard provides an overview of the progress of the close process and alerts users to any issues that need to be addressed.
• Instead of chasing clients for documents, Financial Cents automates client information requests, making it easy to send and manage document requests through a secure portal.
• Typically, with account reconciliations, you must include accompanying worksheets that combine information from multiple sources.

Those numbers are a bit faster than APQC found in 2018, where the median close of 2,300 organizations was 6.4 days. The top 25 percent in that survey were closing in 4.8 days or less, while the bottom 25% needed 10 or more days. By understanding its importance and utilizing my checklist, you can find Statement of Comprehensive Income success in your month-end process. Be proactive and plan for potential roadblocks so you can address issues promptly without derailing the entire process timeline.

Prioritize quality and continuously improve

A negative bank balance might indicate an overdraft (which some businesses have), but it could also mean a deposit was recorded to the wrong account or a payment was duplicated. A negative accounts receivable balance suggests customer credits that weren’t applied correctly. Most accounting software can handle this automatically if you set up the loan correctly. At month-end, verify that your loan balance in the books matches your loan statement balance.

Consider outsourcing non-core accounting tasks, such as data entry and invoice payments, to specialized firms. This allows your in-house team to focus on critical accounting processes, tax filing, and financial information analysis. Now that we’ve covered the importance of the monthly closing process, let’s explore the steps involved in ensuring a smooth and successful financial close.