To make your closing process trouble-free, consider using Wishup’s virtual assistant services. Hire virtual assistants and use their help for a seamless financial closing every month. You can schedule a free consultation with Wishup to discuss how to do this. You can also send an email with your requirements to [email protected] so that we can contact you as soon as possible. Leave this work to the virtual bookkeepers, who will do it scrupulously.

All these conditions have negative long-term impacts on the company’s financial health and stability. 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.

Steps to complete the month-end close process

Automated business processes not only allow standardization of operations but also ensure maintenance of records throughout the year, thereby creating an audit trail. McKinsey showed that 45% of current paid activities that cost an equivalent of $2 trillion in total annual wages, can potentially be automated. 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. The process of month end accounting close is indeed complicated because it involves various types of information and data that must be consolidated, verified and reconciled. It’s a time to look back on what you have done and how well it went, as well as an opportunity for learning and improvement. There are only three phases in a month-end closing process – before, during, and after.

The process supports management review and decision-making, and it reflects the financial status of the company for outside interests, such as investors, lenders, auditors, and tax agencies. The revenue cycle refers to the entirety of a company’s ordering process from the time an order is placed until an invoice is paid and settled. The inability to apply payments on time and accurately can not only lock up cash, but also negatively impact future sales and the overall customer experience.

Draft financial statements

They will also need strong oral communication skill and the ability to convey pertinent financial information to executive teams and stakeholders. However, closing faster can mean a tradeoff between speed and accuracy. Your success is our success.From onboarding to financial operations excellence, our customer success management team helps you unlock measurable value.

Topics covered in these documents are typically a summary of the general ledger, profit and loss statements, and balance sheets. The financial close doesn’t have to be a headache for the accounting team. Following the right set of steps when dealing with financial records at the end of each month will result in a positive impact on the organization as a whole. Sticking to the same schedule for releasing financial statements every month can help you better organize your team’s time and activities.

What is the Month End Close Checklist?

They will examine the report and provide you with insights to help you make better business decisions. Plan your tax obligations as well to avoid cash flow issues and IRS penalties. These workarounds increase the likelihood of errors in your financial data, which can cause problems in the future and take hours to document a reproducible procedure each month. Standardized processes help meet month-end closing goals, even when your accounting team is understaffed. On the other hand, without a systematic way to balance the books, you may encourage employees to look for shortcuts to their responsibilities. Accounting reports contain a large amount of data and are subject to duplicate entries, omissions and other errors.

The problem here is that financial data comes from several disparate sources, and, once extracted, accountants must clean it up and turn it into a consistent format. Having to create multiple spreadsheets to cover labor-intensive data cleansing slows down the process and increases administrative expenses. 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. Organizing the statements is just as important so that you aren’t scrambling to find them in the last few days of the month.

By conducting monthly check-ups, companies keep track of their financial health and can make informed business decisions. This month-end close process flowchart should give you a high-level idea of what a high-growth B2B SaaS company like Gem has to cover each period. But keep in mind that each general task will have many individual steps under it. And the timeline will depend on the specific context of your business.

• The month-end close process starts with collecting information and cleaning it.
• Without a unified set of standards, discrepancies between departments go undetected until teams are mid-close.
• This is what frees their time to not only close faster, but contribute to larger conversations around strategic business goals.
• However, many automation tools are available to hasten and streamline your accounting process.
• As the client base and financial portfolio of an enterprise expand, manual monthly account closure can become unwieldy and impossible without automation.
• You must adjust the accrued and prepaid expense accounts to reflect all income and expenses.
• In most instances, there’s more than one person involved in the account close process.

To minimize the work of sourcing data, it’s helpful to integrate as many of these systems as possible. The month end close process is when all monthly financial accounts are closed. https://www.bookstime.com/articles/month-end-close-process Closing includes collecting all necessary information related to the accounts and reviewing them. It involves checking all income and expenses and comparing them with records.

Developing this structure before you start makes it harder for tasks to fall through the cracks. Technology and automation solutions like SolveXia are designed to help your team function at its highest potential! Make use of these tools that can reduce errors, automate repetitive tasks, and provide the much-desired increased visibility and standardisation into the process. Tools like SolveXia exist to save time, reduce errors, and make your financial processes run smoothly and easily. Alternatively, you can worry less about this step when you implement an automation tool to handle your account reconciliation for you.

Get up and running with free payroll setup, and enjoy free expert support. Learn how FloQast helped Zoom overall its month-end Close process and offer new visibility for leadership following a successful IPO. If everyone has access to the reconciliation documents it will be difficult to keep the work error-free when changes are made in an unorganized manner. Having a system where only authorized employees are allowed to access the documents is essential.

What is the Month End Close Process?

Before we discuss the common errors people make with their month-end closing process, let’s review the benefits of having a month-end close checklist for closing out the month. The month-end close lets your teams track all your monthly business transactions. It is essential to ensure that your accounting data is as accurate and complete as possible. Income statement accounts track activity over a specific period, so those balances need to be zeroed out, or closed, so that the next period can start fresh from zero. Another account is used to keep track of dividends paid out over the period, and it also needs to be zeroed out. The exact steps in the month-end close process may vary from company to company, depending on the type of accounts and transactions that make up its financial data.

• Reducing manual data entry and increasing automation wherever possible are key strategies for simplifying the month end close process.
• A sound accounting system depends on maintaining accurate records of financial information.
• Even though you must not sacrifice quality for speed, you must also plan ahead to meet your month-end financial reporting deadlines.
• This improves the accuracy and completeness of all your financial records, including accounts payable reports that drive your strategic spend management and financial planning.
• Or perhaps your whole team is currently working overtime each month to get the books closed—in which case that extra five days would result in a happier, better rested and more engaged workforce.
• To keep your accounting books as accurate as possible, you need to stay organized.

Because it takes time and effort, the month end close process can be stressful. As previously stated, accounting professionals are highly occupied during the month end close. Verify that you accurately posted each debit and credit entry to the appropriate account.