Reducing the time it takes to get the monthly close done gives your accounting department more time for strategic work and professional development. Closing procedures at the end of the month typically take about eight days in a high-growth B2B SaaS company but can take as little as five days in a small business. But the shorter you can make your timeline, regardless of business size, the better. The workflow should cover the entire process, from ensuring customer payments before the closing date to flux analysis and delivery. Over 50% of companies report that their month-end close process takes two to three weeks to complete.
On your calendar, plan out when you’re going to collect reports, record transactions, and close your books. Establish a closing date by which all expenses and income must be posted. Be sure to communicate the closing date with anyone who has access to adjusting the ledger. One way to stay organized is by using basic accounting software to track your transactions and store your reports.
Month-End Close Process Checklist: How to Get Through Your Financial Close Efficiently
Since the month end closing moves through multiple steps, and is more likely than not to include different responsible parties, it can get hard to manage from a high-level. With an automation solution deployed, visibility is made easy as the system tracks every step of the process and can alert the responsible party should an action item be needed. Although the month https://www.bookstime.com/articles/month-end-close-process end closing process becomes a repetitive routine, it is still laden with its fair share of pain points. Tools like SolveXia exist to save time, reduce errors, and make your financial processes run smoothly and easily. Whether you need to conduct an internal or external audit on your financial statements, the use of an automation tool will make this easier than ever.
Review if you are moving in the right direction and try to spot challenges you may face. For example, an eCommerce company tracking inventory will have a slightly different month-end checklist from a SaaS company with purely digital products. You can do this by looking at the Journal report and filtering the posted date for the month you’re about to close.
Nanonets for the month end closing process
To avoid mistakes, review your financial information again before closing the books. Larger companies that have internal controls, like the segregation of duties, may assign a senior accountant to review the financial information again before closing the books. Account reconciliation involves matching and verifying every business transaction with that of the corresponding bank, creditor, vendor, or business.
It’s a check-and-balance process where reported cash levels, transactions, and budgets are scrutinized to ensure accuracy. Cflow is a cloud-based workflow automation software tool that helps you manage month-end close processes. That helps you automate the month-end process through intelligent bookkeeping. The platform helps you generate reports, reconcile accounts, and pay bills with minimal effort from your end. Month-end close is an essential process that can be refined and streamlined to achieve maximum efficacy with minimum error, waste, and disruption.
Accounts Payable: What Is It, Definition, Job Description, Process, and Software
And the timeline will depend on the specific context of your business. While there’s a certain level of predictability in expenses and transactional activity, each month may come with new wrinkles to account for. This https://www.bookstime.com/ is why Vasco emphasizes that the month-end close needs to have a firm sense of flow—from the moment the team starts to gather information to when it crosses the finish line with finalized financial statements.
This requires that a person (or system) handles pulling together all relevant financial information, with items like the income statement, expense records, a list of transactions, and the like. If there’s no centralised data solution to combine all your systems or spreadsheets, this step can be unnecessarily time-consuming. The complexity of closing can make the end of every month feel stressful, especially if your financial data isn’t well organized. If closing the books is a constant cycle where the next month’s close begins before the previous month is put to bed, this article is for you. Like all business processes, the month-end closing process has the potential to help your company thrive, or hinder its growth and success.
Prioritize team collaboration
You should also determine what staff should do if they run into barriers and how they should communicate any bottlenecks. Drive visibility, accountability, and control across every accounting checklist. Sales are entered as they occur and a second entry is made in receivables, if we are waiting for the cash, or in a cash account if the sale was accompanied with a payment. You can get your general ledgers prepared by Wishup’s virtual bookkeeping assistants. They are well-versed in all bookkeeping activities and can add value to your business.
Furthermore, manual performance of redundant, potentially automatable tasks decreases the productivity of the company and low productivity can cost employers around USD 1.8 billion dollars annually. Any accounting close activity cannot be expedited because of the possibility of errors, which are unacceptable in the accounting field. The above survey also found that 85% of participants reported having to re-open the books in at least one month during the past year to fix errors. A closing goal is critical for the process to flow smoothly and finish on schedule. Take time to plan the sequence of closing tasks (or use our handy checklist below). Then assign responsibilities and determine deadlines for each step to help the team effectively manage the process.
Companies come to BlackLine because their traditional manual accounting processes are not sustainable. We help them move to modern accounting by unifying their data and processes, automating repetitive work, and driving accountability through visibility. Your success is our success.From onboarding to financial operations excellence, our customer success management team helps you unlock measurable value. Through workshops, webinars, digital success options, tips and tricks, and more, you will develop leading-practice processes and strategies to propel your organization forward. Our solutions complement SAP software as part of an end-to-end offering for Finance & Accounting. BlackLine solutions address the traditional manual processes that are performed by accountants outside the ERP, often in spreadsheets.
And some firms practice the annual version known as the year-end close. Once you close your books, you can’t go back and create journal entries for that month. So make sure your financials are accurate before closing the accounting period. The month end close process involves recording, reconciling, and reviewing all business transactions and finalizing the account data for the month.
Flowchart for Month-End Close Process
This will help you make decisions by having accurate information about the business’s performance during that time period. The financial close process at the end of every month helps businesses to keep their accounts up-to-date. It ensures that their data is accurate and can be relied on to prepare annual reports. The 10-step process explained in our guide will help you create an accounting month end close checklist.
This is generally done by your accounting team, which reviews all records, reconciles, and other relevant account information. Vena automates time-consuming financial close processes, e.g., data collection, account reconciliation and inter-company transactions. Each item on the list is often done through a separate spreadsheet by isolated individuals specific to their departments. When done the traditional way, these tasks are invisible to the wider finance function, and it can be difficult to integrate the work with the monthly closing process as a whole.