Equip your team with any skills and tools they need to perform their tasks accurately and efficiently. Both internal and external investors rely on transparent financial reporting. A well-executed month-end close process enhances investor confidence and fosters organizational trust. A structured and detailed checklist can effectively organize the month-end close and ensure that no important tasks are overlooked. For example, if the process for submitting expense reports is not clearly defined, it can result in a variety of different formats that create additional work for the finance team.
- Clear visibility and process automation give top-tier finance departments the tools to close quickly.
- Before you start adjusting, perform a flux analysis on the balance sheet and the P&L.
- For businesses with a high volume of transactions and multiple payment processors to reconcile, the time spent is more likely to be even longer.
Proper preparation is another important factor in ensuring the close process is conducted quickly and accurately. One of the first steps in a systematized close process should be tying up the month’s loose ends. When preparing to close, contact department heads to check on budget adherence, unexpected expenditures, anticipated last-minute sales, and more.
Anyone with access to your QuickBooks file can go in and change something in the previous month or year, and you might not find out until it’s time for your CPA to prepare your tax filing. The month end close process involves recording, reconciling, and reviewing all business transactions and finalizing the account data for the month. The month end close process allows you to track all the transactions your business conducts during the month.
D. Train Employees on New Technology
Moreover, automating the month-end close process promotes collaboration among cross-functional teams. By centralizing all relevant data in one system accessible by multiple users simultaneously ensures everyone is working with accurate information in a collaborative environment. Additionally, relying on manual processes makes it challenging to maintain consistency and standardization across different departments or locations within an organization. Each team may have their own preferred methods or formats for reporting financial information, leading to inefficiencies when consolidating data at month-end.
Ignite staff efficiency and advance your business to more profitable growth. Accounts receivable automation refers to using software to manage customer invoices and payments. The software can handle tasks such as sending reminders, issuing credits, and issuing refunds. Good AR automation can help to streamline the process and improve accuracy.
Automate As Much as You Can
Once everyone is satisfied that the statements are complete and accurate, they can be formally submitted. BlackLine is a leading accounting software platform that has helped thousands of accounting teams make the move to modern accounting. The month-end closing process is a time-consuming time for any business. At the end of each month, you must reconcile your accounts, prepare financial statements and close out your books. The whole process can be pretty daunting, and it’s often tempting to just put it off until the last minute. However, rushing through the month-end closing process can lead to mistakes and oversights.
Work through your accounting systems to ensure you’re making invoice payments on time. Use this opportunity to search for mistakes, such as duplicate invoices that could lead to overpayments. Accurate monthly data feeds into several other accounting procedures. For example, your year end close becomes a lot simpler if you have accurate monthly reports to work from. If the financial documents required for the month-closing process are stored in different locations, it will be cumbersome to access them quickly.
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. After hearing a month end process flowchart provides for your organisation, you’re likely wanting to create your own. To save time and energy in every month-end closing process, schedule a demo of Order.co.
This level of visibility ensures that everyone is on the same page and that issues are spotted before they become significant problems. You can be sure at the end of each month that any transactions have fully occurred either before or after the closing and that your month-end balance is accurate and up-to-date. A fully completed set of financials from the previous month can also be used as a foundation for next month’s business decisions, as a closing period highlights areas where you can improve. Additionally, automation enables faster decision-making by providing timely insights into financial performance. Instead of waiting days or weeks for manual reconciliations to be completed, management can access up-to-date information at their fingertips.
Cash vs Accrual Accounting: Speaking The Language of Business
Most forms of accounting software have features built-in for this purpose. Ensure that the accounts payable balance, for instance, falls in line with the general ledger. To that end, organize the receipts and write down all your purchases. Cross-check your records during this step to make sure everything has been paid. 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.
Own the of your business
Sticking to the same schedule for releasing financial statements every month can help you better organize your team’s time and activities. Adopting Autonomous Accounting Solutions like HighRadius’ can help you make day-zero financial close a reality through immediate and accurate decisions. The month-end closing process is a routine activity for every business. Before we talk about its best practices, it is essential to identify and mitigate the challenges involved in completing the month-end closing process accurately and quickly. Let’s look at some of the common roadblocks businesses face during the month-end close and their solutions.
Review cash accounts
More than 4,200 companies of all sizes, across all industries, trust BlackLine to help them modernize their financial close, accounts receivable, and intercompany accounting processes. Standardize, accelerate, and centrally manage accounting processes journal entry for cash discount calculation and examples – from month-end close tasks to PBC checklists – with hierarchical task lists, role-based workflows, and real-time dashboards. While the closing process may be time-consuming, it’s essential for keeping your business running smoothly.
Your accounting and finance teams know the rhythm of the business, such as when vendors pay invoices and when your company pays their expenses (like software bills and salaries). Lean on these teams to set the timeline for overall review, including checking automated figures. While reviewers are noted throughout the process, Vasco schedules an overall review of the report around Day Six to account for any potential inaccuracies. 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. Company B, a medium-sized retail business with multiple locations, faced similar challenges during their month-end close.
It’s what makes the creation and understanding of financial statements possible. While the year-end financial close is the most comprehensive and typical closing process, most accounting departments also complete a close for each accounting period. However, by using a checklist and utilizing the latest technology, the monthly closing process can be completed in mere hours instead of days. To perform a month-end close, the business’s accounting team will review, record, and reconcile all account information to confirm that the data is accurate.
A properly and consistently executed month-end close is a fundamental practice for a well-run business operation. It is important for all divisions within the business to adhere to the month-end close process to provide consistency and reliability within the operation. 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. BlackLine is an SAP platinum partner and a part of your SAP financial mission control center.