Month-End Close Checklist Best Practices for 2022

Month-End Close Checklist Best Practices for 2022

While conceptually simple, this process involves time-intensive work, especially in traditional setups where accounting departments rely on a mix of manual steps and Excel spreadsheets. Your month end close process should include recording incoming cash, checking your AR records, and reconciling all accounts, including petty cash. Track all your business transactions, guarantee accurate records, and mitigate fraud risks to ensure financial well-being of your organization. It serves as a mandatory fiscal reporting requirement for certain companies, ensuring compliance with financial regulations and standards. It helps in tax filing, preventing accounting errors, and getting an overall picture of the company’s cash flow scenario.

  • HighRadius’ Autonomous Accounting Solution provides financial close automation which offers project templates, close task management, and accounting anomaly detection.
  • Double-check your reports once more and then deliver them to the executive teams for reviewing and analysis.
  • Business owners can’t forecast the future until they know the actuals from the prior period.
  • If you are required to complete the closing process within a week, and you know that the timeline is unrealistic, then communicate it beforehand.
  • Guide your business with agility by standardizing processes, automating routine work, and increasing visibility.

An automation tool can do this for you and flag you if there’s anything mismatching. According to data from the American Productivity & Quality Center, the median account close process for 2,300 surveyed organisations was 6.4 days, back in 2018. In a survey from 2019 out of Ventana Research, 46% of organisations were closing in four days. There will likely be various tools and systems involved, especially because of the sheer amount of data required for the account close process. Define your ideal time frame for each task and set deadlines for the account close process. This way, every person with a defined role in the process is aware of what needs to be done and by when.

Never Forget Petty Cash

Automatically create, populate, and post journals to your ERP based on your rules. Sub-ledgers break down the details that won’t be found in the general ledger. Be sure that anything in a draft form is taken care of and be aware of any recurring transactions that haven’t gone through. Learn how you can avoid and overcome the biggest challenges facing CFOs who want to automate. Even worse, 78% of those surveyed said they’re pressured to close even faster. Discover books, articles, webinars, and more to grow your finance career and skills.

  • Accurate month ends make completing the year-end quicker and more accurate, thanks to an effective month end process.
  • Reconcile the 2 to reflect expenses paid and income received for the month.
  • During the month-end close, the team ensures timely journal entries for recurring monthly transactions, covering aspects like accrued expenses, amortization, depreciation, and loan interest.

Once you have implemented automation tools for your month-end close process, it’s time to put them to the test. Testing is a crucial step in ensuring that everything runs smoothly and efficiently. It allows you to identify any issues or errors that may arise and make necessary refinements. Evaluating current processes and identifying pain points is an essential initial step in automating the month-end close process.

Tips to Improve the Month-end Closing Process

It’s crucial to emphasize the benefits of using this technology during training sessions. Show them firsthand how automating repetitive tasks can save time and reduce errors. Highlight how this change will improve overall efficiency in their day-to-day responsibilities. Automating processes eliminates paper-based documentation costs while also reducing overtime expenses attributable to late nights during month closes. Companies must comply with various accounting standards and regulations, such as GAAP or IFRS, which can create additional challenges during the month-end close process. Ensuring compliance and staying up-to-date with new rules can be complex and time-consuming.

How long should it take you to close out your books?

This will give you a better understanding of how intuitive and efficient the tool is for your team. Additionally, seek feedback from other finance professionals who have implemented similar solutions. Their insights can provide valuable guidance and help you avoid potential pitfalls. Compliance with regulatory requirements can become burdensome without automation in place.

Why is the month-end close process important?

Join 12’000+ finance professionals and get the latest insights on spend management and the transformation of finance directly in your inbox. If tax work is overwhelming, we offer tax preparation and tax filing services as well. With Bench, you’ll get unlimited year-round tax support to stay on top of your taxes. Routinely monitoring inventory levels will help you manage your working capital efficiently. If you overstock, you’ll trap money unnecessarily in inventory and risk wastage. Likewise, if you understock, you’ll risk production losses, missed revenue, and reputational damage.

This step ensures that the organization’s balance sheet reflects the correct value of its fixed assets. Reconciliation involves comparing and aligning various financial records to ensure accuracy. Bank statements, credit card statements, and other financial accounts are reconciled with the corresponding entries in the general ledger.

But creating one might take the time you would have used for other high-value tasks. To match the difference between the client’s opening and closing balance with the corresponding transaction details. To analyze the difference between the business’s total liabilities and assets by subtracting the client’s liabilities from their assets. Streamline your expense management, simplify expense reporting, and prevent fraud with Yokoy’s AI-driven expense management solution. Before we dive into the nitty-gritty details, let’s establish a clear understanding of what the month-end close process entails. Find professionals with solid track records (like us!) to handle your finance work.

For businesses with a high volume of transactions and multiple payment processors to reconcile, the time spent is more likely to be even longer. In short, during the closing, you’ll complete all open orders, process invoices, update inventory levels and balance the books. While this may seem like a lot of work, it’s necessary to prevent disruptions during business hours and ensure that the company’s financial statements are accurate and up-to-date. Once you create a month-end close process checklist in Excel, you can use our financial close management software to automate tasks to save time, reduce stress and maintain accuracy. The month-end close involves your finance and accounting teams collecting, reviewing and reconciling the previous month’s transactions and financial activity. So it looks like your books are closed for the year, but this isn’t a formal close process.

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