Month-End Closing Checklist, Best Practices & Automation

Financial Automation
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Finance and accounting teams know the month-end closing checklist all too well. Since it’s a recurring process, month-end close best practices can save you a lot of time, money, and mistakes. That’s why we’re going to walk through the best way to execute your month-end closing process and see how automation software can make all the difference.

Coming Up

What is the Month End Close Process?

What are the Benefits of Month End Close?

What are the Steps for Month End Close?

What is the Month-End Closing Checklist?

What are Common Month End Close Mistakes?

What are Best Practices for Month End Close?

What Month End Close Tasks Can You Automate?

Closing Words

What is the Month End Close Process?

The month-end close process is an accounting process to ensure that the books are balanced and up-to-date before closing out the accounting period. Accountants go through transactions and make sure that they are entered properly within the internal statements.

While the month-end close checklist helps to make sure that everything is in the right order, it also is what gives stakeholders and business leaders a clear view of how the business is performing. This is critical to know in order to make informed decisions at any point in time.

What are the Benefits of Month End Close?

The month-end close process isn’t a nice-to-have process, it's a must-have procedure to run a successful business.

When you perform it accurately, your business benefits by having:

1. Accurate Financial Statements

The month-end close process is like checks-and-balances (no pun intended) for your financial statements. The process verifies that all data entered is right.

2. Timely Information

Financial information is always important to have, and when you have a set monthly schedule for closing the books, you will always know what to expect for each financial period.

3. Improved Compliance

Financial statements must adhere to regulations, especially for publicly-traded companies. As such, strong internal control for the month-end close process is required.

What are the Steps for Month End Close?

The month-end closing checklist and month-end closing process consists of five main steps, namely:

1. Data Collection

The process begins with data in hand. For most businesses, data exists across spreadsheets and systems, so the data collection step can end up taking a lot more time than desired.

Relevant financial information will include the income statement, expense records, and other transactional data. An automation solution can simply connect your data systems and pull the necessary information.

2. Data Reconciliation

Once the data is collected, the primary step is to make sure it’s actually right. This involves cross-checking external statements with internal documents, which is known as reconciliation.

With higher transaction volume and the use of multiple payment processors, this step becomes increasingly complex. Unless, you have automation software, which will cross-match transactional data for you!

Finance automation software can help you complete processes 85x faster with 90% fewer errors, all the while, you remove key person dependencies and increase compliance.

3. Fixed Assets Review

Equipment, storage, housing, and any other fixed assets are also part of the equation. They have to be assessed for their depreciation and value.

4. Financial Statement Creation

With all the information ready to go, it’s time to prepare financial statements.

5. Final Review

Given the many moving parts and amount of information involved, the month-end closing process culminates with a final review. With this extra layer of care, it leaves a final check for any mistakes.

When performed manually, there is a lot of room for error, delays, and key person dependencies. That’s why so many business are turning to finance automation software that can execute the reconciliation for you, so the critical steps of the month-end close process are streamlined.

As a result, companies can rest assured in knowing that their data is connected, collected, transformed, and reported with utmost accuracy.

What is the Month-End Closing Checklist?

A month-end closing checklist is like a blueprint and to-do list that helps you stay on track so nothing falls through the cracks.

As a CFO or finance leader, you can adjust your month-end closing checklist as needed, but this checklist below gives you an idea of what should be incorporated:

1. Record Incoming Cash

Incoming cash can come in the form of payments, loans, and revenue. Any funds received within your business during the month should be notated. At the same time, it’s smart to review any outstanding deposits, check that you’ve sent your invoices, and take a moment to count any cash on hand.

2. Review Accounts Payable

Maintaining accurate records of accounts payable only grows more complicated as the transaction volume increases. Accounts payable records should be reviewed to see if they have been paid and to make sure that your records are accurately reflected as to what you are expecting to pay.

3. Reconcile Accounts

Mistakes are inevitable, especially in finance and accounting departments when data is endlessly flowing and so many different people are at work to maintain order.

Reconciliation is a critical step to cross-reference records with account statements to see that they match. The more frequently you can conduct reconciliation, the less chaotic the process will become.

4. Check Financial Statements

Last but not least, it’s a good idea to look over your key financial statements, including:

  • General ledger
  • Profit and loss statement
  • Income statement
  • Cash flow statement
  • Balance sheet

When your books are in order during your month-end closing checklist, you can head into the next accounting period with confidence and clear focus.

What are Common Month End Close Mistakes?

Since all businesses perform the month-end close process, there are known common mistakes and pitfalls worth trying to avoid.

These include:

1. Manual Errors

With spreadsheets and the volume of data, it’s inevitable for mistakes to be made, especially when working by hand.

2. Lack of Knowledge

Team members should be well-informed about the process and what to do in the case of anomalies. Poor communication can lead to chaos and mistakes, too.

3. Decentralized Data

When financial statements and documents are stored in various locations, it takes time to collect and connect the dots. Decentralized data can quickly bog down your team.

4. Siloed Statuses

When multiple teams and people are involved in a disconnected and manual process, it’s hard for stakeholders and managers to check in on its status.

All of these challenges can be easily overcome with the aid of automation software. Automation software connects systems, centralizes data, stores it securely, applies a standardized month-end close process, and offers transparency to check-in on the process’ status at any time. This is especially the case with a cloud-based solution.

What are Best Practices for Month End Close?

The month-end closing checklist is repetitive by nature, but it doesn’t have to be all too cumbersome. With the right mindset and tools in place, you can streamline the entire process and have it flow swimmingly.

Keep in mind these month-end close tips:

1. Use Automation Software

Overall, the biggest impact you can make on your organization and its finance team is to add the help of finance automation software. You will dramatically expedite important processes and limit manual errors.

For example, reconciliation that takes weeks or days can be completed in just minutes as the automation solution will perform transaction matching in seconds.

From tedious tasks to overall process flows, automation software is equipped to handle the data-heavy and repetitive tasks so your team can focus their time on analysis and value-add responsibilities.

By automating critical processes, you improve accuracy, gain greater internal control and enhanced transparency.

2. Focus on Accuracy

Speed is important to meet deadlines, but more important that speed is always accuracy. In terms of financial data, accuracy is paramount. By using an automation solution, you will know that your data is always up-to-date and securely stored, with adequate version control and integration capabilities to centralize data.

3. Constantly Improve

It’s easy to get stuck doing something the way you’ve always done it. But, when it comes to the month-end close process, there are so many nooks and crannies, so it’s good to maintain a mindset that is positioned for continuous improvement.

What Month End Close Tasks Can You Automate?

The month-end closing process is well-suited for automation because it is data-heavy, repetitive, and involves multiple people and systems.

Automation software works to standardize and streamline the entire month-end close process, specifically with regard to:

1. Data Collection

Automation software can connect your existing data systems and pull necessary data that’s needed from each source. Along with integrating with your tech stack, the automation software can also transform data as needed for use (and insights).

This is especially important when you’re using multiple payment providers, such as: Amazon, eBay, Stripe, Worldpay, etc. to fulfill high volume transactions.

2. Data Entry

Automation software can enter data for you from one system to another. Without manual involvement, you can prevent mistakes.

3. Transaction Matching/Reconciliation

Automation software executes reconciliation, including transaction matching, so you don’t have to spend valuable time cross-referencing records.

When the system notices an anomaly, your team will be notified to investigate and remedy the error. Or, if it’s the case that the discrepancy is justified, then they can keep moving forward.

Closing Words

Having a concise month-end closing checklist offers a clear way to perform the month-end close process succinctly and correctly.

To maximize productivity, lower costs, and prevent errors, companies can simply implement automation software to standardize and streamline the recurring and important process.


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