Granted, technology tends to be the focal point in this area – and for good reason. As we’ll discuss in a bit, the right tools can be absolute game changers for your month-end close. But even the shiniest, most advanced software platforms won’t do much good if the foundation of the house – including sales and purchase orders – is already rotting away. To proceed, evaluate each step in the closing process and identify dependencies, potential roadblocks, or other areas of inefficiency. This type of analysis lets you streamline the process and eliminate unnecessary delays or redundant tasks. And as we’re about to describe through our five-step process to a better close, it’s really just a matter of being proactive rather than reactive, and effectively managing exceptions as you go.

Top 5 advantages of using a financial close solution

In this comprehensive guide, we will delve into the month-end close process, highlighting its significance, steps, and best practices to help you streamline your financial operations effectively. With up-to-date records, you will save time catching up with your financials during the month-end process. Your accounts payable only captures short-term payables to creditors. Reconciling accrued expenses will help you stay on top of all invoice payments and dues within a year. But accounting for every transaction is key to avoiding discrepancies in your financial data. Prepare a bank reconciliation to reconcile your bank account with your financial records.

How to build a month-end close process

That can work for a while, but as the accounting department grows, that process can become total chaos. Tribal knowledge abounds, and tasks can be easily overlooked, especially if a key person is out for a few days. Finance and accounting need to find any and all opportunities to automate tasks in the monthly closing process. This is what frees their time to not only close month end closing process faster, but contribute to larger conversations around strategic business goals. 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. In order to “close the books” and set the financial records in stone, so to speak, companies cross off the month end closing checklist.

Intelligent Reconciliation Solution

All related documentation is sent to the accounting manager, Controller, or finance management for review. 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. Ensure that the accounts payable https://www.bookstime.com/ balance, for instance, falls in line with the general ledger. To that end, organize the receipts and all your purchases with your accounting system. Cross-check your records during this step to make sure everything has been recorded and paid when due or prompt enough to take an early payment discount.

Own the of your business

Adopting Autonomous Accounting Solutions like HighRadius’ can help you make day-zero financial close a reality through immediate and accurate decisions. The accounting department often takes a lot of time to complete the month-end close process. But, business leaders want to streamline and make the process faster as the month-end close numbers act as a starting point for the plans for the upcoming months. Some small business owners underestimate the importance of the month end close process.

Make use of the month end closing checklist so you don’t miss any necessary steps or documents. With each item on the month end close checklist being handled by separate departments, it makes it difficult to know what’s happening at every stage when performed manually. As mentioned, this tends to be one of the most time-consuming aspects of the month end closing process. Tools like SolveXia exist to save time, reduce errors, and make your financial processes run smoothly and easily.

What is a month-end closing process checklist?

But if eliminating that journal entry saves your team an hour of effort, then eliminating ten entries can preserve an entire workday a team member can devote elsewhere. Along those same lines, scoping helps define critical guide rails for your month-end closing, ensuring everyone and everything remain focused, feasible, and aligned with your specific needs and goals. Put another way, a scoping exercise will determine what you will and won’t look at, making sure you allocate resources more effectively. Artificial intelligence and machine learning can be advantageous here; technology saves time and reduces the risk of human errors.

• So, a centralized repository is recommended to ensure the smooth collection of data.
• Take the necessary steps to ensure you’re adhering to the new guidelines in ASC 606 for revenue recognition.
• These, along with manual entries, can be minimized or eliminated through process improvements or automation.
• It serves as a mandatory fiscal reporting requirement for certain companies, ensuring compliance with financial regulations and standards.
• Of course, all of these tips and tricks can also be applied to year-end closing and might benefit some of your other accounting systems.

What is the Month-End Close Process?

They are also an indicator of overspending and other budgetary issues. Not everything of value in the organization can be set to a cash amount. Fixed assets—which can include equipment, property, and vehicles—add long-term value to your business.