10 Steps to Streamline Your Month End Close Process

month end closing process

This process involves several steps your team will complete over several days, manually or with a closing software. The month-end closing process is a routine activity for every business. Before we talk about its best practices, it is essential to identify and mitigate the challenges involved in completing the month-end closing process accurately and quickly. Let’s look at some of the common roadblocks businesses face during the month-end close and their solutions.

How Long Does It Take to Perform Month-End Close?

The process provides an opportunity to review and improve the efficiency of financial operations. Regulatory agencies require businesses to adhere to specific reporting standards and deadlines. Integrate your existing tools with Nanonets and automate data collection, exports storage and bookkeeping. Checklists serve as reminders of the essential steps, enable verification, and enhance discipline, all of which lead to seamless and efficient operations. If you have a closing date in place, work towards it by planning in advance. Communicate with everyone involved to make sure they are aware of deadlines, so they can properly manage their time.

Step 2: Automate What You Can

Start by accurately compiling your account statements and recording all expenses and income for the month. Organize your monthly financial statements and data to ensure nothing slips through the cracks. No matter what your bespoke month-end close process looks like, data availability and integrity will make or break its effectiveness.

  • After all the stages have been accomplished, your month-end closing process is finished and you can officially close the period.
  • Download our white paper, “The Holy Grail of Accounts Payable” to learn how your growing business can use AP automation to improve the monthly close process.
  • Implementing a month-end closing checklist increases efficiency and accuracy, reducing the time, effort and expense involved in preparing for year-end audits.
  • Data analytics offer businesses insights to make decisions that are backed by real-time data.
  • 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.
  • Cash distributions or dividends paid out to owners during the period need to be closed out to Retained Earnings so that the balance reflects the earnings that the company retains for future needs.

Step 3: Map data sources, workload required, and timing constraints

This allows for leaders and stakeholders to make informed decisions and also set up triggers in the event of errors or impending business risks. Automation technology like SolveXia is built to streamline processes like the month end close. With easy implementation and use (i.e. no coding), there are many upsides to making use of such tools. Data analytics offer businesses insights to make decisions that are backed by real-time data.

The month end close checklist

  • Review all manual and automated data flows related to revenue recognition and commissions.
  • Plus, having accurate monthly reports makes your year-end close much simpler.
  • It can become overwhelming unless the accounting team has a well-designed SOP that can be followed.
  • But trying to chase down updates in Slack messages, via email, or in person can slow you down.
  • Now that your main steps are done, you can get ready to repeat the process again next month.

While you may lack the resources to hire more staff, training some employees for crucial steps in the closing process may be a viable option. As long as an experienced financial professional https://www.bookstime.com/ or manager takes responsibility for month-end closing, this alternative can work for your business. It is challenging to manage a business without readily available financial statements.

month end closing process

Automate what you can and make sure that all team members have an accurate list of their responsibilities – this will help curb any confusion or missed deadlines. Finally, the period is marked as closed in the accounting system to prevent any further transactions from being recorded for that month. Today, we’ll go over all the important steps needed for a successful month-end close and give you an extensive guide to managing your month-end close process. That being said, having an understanding of the process and an organized checklist of tasks that need to be completed is key to ensuring accuracy and efficiency. Month-end close allows a company to properly record and account for all transactions that have occurred during the month and to precisely reflect the financial situation and performance. But if you don’t see your business having an accounting department soon, you can outsource your finance work to professionals.

A month end close process flowchart can help to clarify the process and keep everything in order. The month end process flowchart is a visual representation of month end closing process each step of the process, outlined in sequential order. The monthly closing process provides an organized way to ensure accounting accuracy and efficiency.