Month End Close Process Flowchart: Complete Guide

That means they have to know who’s responsible for what so they can always talk to the right people. You have 10 days after the month’s end to present your closing information. Use that time to ensure your data is as accurate as possible before your closing date. You’ll parse through a lot of financial information during these account reconciliation processes.

• They are an asset you’ll recognize as expenses in different accounting periods.
• Finance teams must review the depreciation schedule of these items and recategorize them as expenses.
• Visit our “Solutions” page to see the areas of your business we can help improve to see if we’re a good fit for each other.
• Accurate monthly data feeds several other accounting procedures.
• Save time, reduce risk, and create capacity to support your organization’s strategic objectives.
• Month-close reporting simplifies the process, making it easier to audit.

But accounting for every transaction is key to avoiding discrepancies in your financial data. With account reconciliations, you’ll spot mistakes in your financial data and fraudulent transactions (if any!). If the financial documents required for the month-closing process are stored in different locations, it will be cumbersome to access them quickly.

The Steps of the Month End Close Process

Another way to improve the month-end close is by accessing real-time data. By using up-to-date information, you will be able to quickly identify any issues that may arise during the month-end close. This data can then be used to correct any mistakes that surface during the process. For example, if an error occurs when preparing the income statement, the finance team can use the latest information to determine which line item caused the issue. Next, accounting teams must match and verify each transaction for that current month to ensure there are no discrepancies. Reconciling all accounts on the balance sheet allows executive teams to have greater visibility over their cash flows for the current period.

• If you’d like to be one of them, our team is waiting to help you.
• Make the most of your team’s time by automating accounts receivables tasks and using data to drive priority, action, and results.
• The flowchart below provides a visual overview of the month-end close process and the key activities that take place in each step.
• It is important to note that this statement will show whether or not the company is making or losing money.
• This is more likely to be the case at companies with smaller accounting teams, where the urgency for documentation hasn’t been as strong.

With automated solutions, you can reduce manual errors, streamlining reporting, and save time. The https://www.world-today-news.com/accountants-tips-for-effective-cash-flow-management-in-the-construction-industry/ returns yet again, expectedly and possibly dreaded. Like any business process, if your month-end close is built on a shaky foundation, there will be problems. Incorrect recording of data, expenses not captured, or captured expenses coded incorrectly are potential problems from a poorly designed process. Without the ability to capture accurate financial data, you won’t deliver reliable reports in a timely manner.

What are the 6 Steps in the Month-End Closing Process?

The person reviewing the closing documents is not directly tied with the closing process up until this point and has a chance to look at everything with fresh eyes. The mere act of going over your financial statements can give you intel into what you’re buying and whether you’re getting a proper return on your investment. They are also an indicator of overspending and other budgetary issues. 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.

Make a note of comments or issues related to the different steps involved and use this to optimize the process. Every member of the team needs to be clear on the tasks and responsibilities of their role. In order to do this, you first need to identify all the tasks that need to be completed. Once you’ve done this, Google Sheets and Layer can help you set up automatic data flows to and from specific users, assign permissions and monitor progress. Create reports to analyze your data, so that you can make better business decisions. Review the fixed asset register to ensure that all assets have been recorded.

Increases Efficiency Among Your Teams

Close sub-ledgers, if anyCheck for any transactions that are in draft form, recurring transactions that have failed, and transactions still awaiting approval. Here — can get you started on developing the best process for your organization. Read how in just a matter of weeks, Qualys leveraged FloQast to standardize the close process and organize controls and documentation for a more simplified SOX compliance. Learn how FloQast helped Zoom overall its month-end Close process and offer new visibility for leadership following a successful IPO. In this on-demand webinar, you will learn the different components of your ROI, how to analyze your organization, and what defines a good technology partner. BlackLine’s leadership team is built on experience and expertise.

Never underestimate the significance of monthly closing and the importance of a month-close checklist. Keeping track of what happened in the previous month can help position your company for future success. Technology can also be used to standardize account reconciliations and automate the creation and processing of the thousands of journal entries businesses inevitably work with. The elimination of manual data entry is usually the first selling point accounting teams look forward to, but the advantage here extends beyond that. Communicate your plans to other team members involved in the month end closing process to get everyone on board. You can tweak the calendar as time goes on to fit it around your schedule.

Step 1 – Record Monthly Expenses and Income

During your month-end close process, you need to reconcile all of your accounts. To do this, match your records to your account statements from outside entries, such as the bank. Make sure your records for the month are accurate by performing a bank statement reconciliation. The month end close process involves the recording, review, and reporting of the financial transactions that have happened in the period since the last close in the previous month. It provides a quick overview of the company’s financial health over the period and serves as a cutoff point for transactions so that the following month starts afresh.

• To understand the real cost of inefficient month-end close processes and discover how you can eliminate and automate tasks to focus on more strategic work.
• It supports your ability to conduct quarterly and year-end financial closes accurately and efficiently.
• Removing the manual process of account reconciliation will result in reduced human error, time savings, and, in turn, cost savings.
• Department heads know what tools and systems they need to be successful–and these tools and systems can be changed or updated between month-end closes.
• The month-end closing process is a time-consuming time for any business.

As you may know, or can guess, this could end up taking days or even weeks. Instead, you can utilise an automation solution that can perform the data collection for you. Solutions like SolveXia can connect to your existing tech stack and pull information from disparate sources, so you don’t have to spend time on this meticulous task. Once completed, carefully review these statements and make changes based upon additional data, calculation errors, or budget variances. If you operate off a financial plan, compare the results with your forecast. This can be a monotonous task to undertake every month but ignoring it can lead to problems later on.

Ready your reconcile accounts

The month-end close is one of the accounting and finance team’s most important tasks. Financial Insights Five Keys to Preparing for a SaaS Financial Audit Don’t let time-consuming financial audits bog down your team and put stress on the entire organization. The best finance teams real estate bookkeeping operate in a way that keeps them prepared for audits at any time. Out-of-the-box financial reports in ERPs like NetSuite give you a basic foundation of insights about a business. Learn how Mosaic Custom Reports take NetSuite financial reporting to the next strategic level.