accounts receivable
fixed assets

A monthly close process is highly recommended to ensure accuracy and transparency. In fact, depending on your company’s size and business cadence, you may need to close the books weekly or even daily. Closing the books regularly is important to your company’s financial health and performance. Even if you are only required to do so yearly, you may find that recording and reconciling the accounts for a one-year period is an absolute nightmare. Organizing the statements is just as important so that you aren’t scrambling to find them in the last few days of the month.

The reality is, once you start performing this check, it becomes an easy (and non-time-consuming!) way to check on your shop at the end of each month. Healthcare and Human Services Explore the benefits of implementing automation within the financial close process. A smooth year-end close is essential to preparing for next year’s tax season. Lastly, take a look at how much of your monthly close is still dependent on legacy tools. It seems that no matter the team or task, there is always someone using a spreadsheet. While spreadsheets still have their role and their simplicity and familiarity can be attractive, new tools are constantly being developed that can often serve your team much more efficiently.

Capturing and extracting data intelligently from invoices, receipts, bills, and other financial documents. GAAP requires foreign currency balances to be revalued at the rate at the end of the period. Reconcile Prepaids, Fixed Assets, Work in Progress, and any Deferred Revenue accounts. Post depreciation, amortization, and any other revenue or expenses from other modules. All of these issues can be overcome with close management software.

The Steps of the Month End Close Process

If you don’t establish these lanes for your team members at the outset, they might get confused about what tasks they need to do and end up repeating work unnecessarily. Is not authorised by the Dutch Central Bank to process payments or issue e-money. An application under Electronic Money regulations 2011 has been submitted and is in process.

  • Keep in mind, each business’s month-end accounting procedures can vary depending on the type of business, accounts, and accounting method.
  • Drive accuracy in the financial close by providing a streamlined method to substantiate your balance sheet.
  • Banking and Financial Services Streamline and automate your reconciliation and financial close processes.
  • Reconcile your cash accounts first, which are easier to process since discrepancies and mistakes are apparent when you’re dealing with cash.
  • It is important to note that the month-end close is an official process to finalize the balance sheet numbers.
  • Most accounting software packages perform this process invisibly when a box is checked to close the books.

Having to how to calculate sales tax multiple spreadsheets to cover labor-intensive data cleansing slows down the process and increases administrative expenses. The month end closing ends when the previous month has been set in stone and no new transactions are recorded on it. Reconcile your cash accounts first, which are easier to process since discrepancies and mistakes are apparent when you’re dealing with cash. This step also makes you aware of how much cash you have on hand as a business. The month-end close process is a complicated procedure wherein you need to gather, analyze, reconcile, and adjust data from various systems.

Prepare Statement of Cash Flows and Balance Sheet Accounts

By analyzing your numbers and implementing learnings, you can drive your business to success. For example, you can use accounting software and scan your receipts in real-time to make your month-end a breeze. They are an asset you’ll recognize as expenses in different accounting periods. 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.

Also, if there is an error in the, using the manual process will take a lot of time and effort to find the cause and fix it. This necessary time delays the release of monthly financial statements as your accounting team must spend time reviewing completed work. Now that you have all the information in place and have verified them, it’s time to prepare your financial statements. These include the balance sheet, income statement, and cash flow statement. Make sure the entries are recorded correctly and that there are no discrepancies between the financial statements. The first step in the month-end closing process is to collect all the relevant financial information.


Finally, if there are any misallocated entries , these will need to be corrected as well so that everything balances properly at month’s end. Make use of the month end closing checklist so you don’t miss any necessary steps or documents. In fact, Accounting Today reports that 36% of their 259 surveyed accounting and finance professionals say they’ve had to reschedule out-of-work commitments during the month-end close process. The month-end close is one of the accounting and finance team’s most important tasks.

Back Up Your Data

Routable does the data entry for you, preventing errors and saving work down the line. It is essential to review the books and records for any current month activity that might not be reflected in cash or credit card account activity. This can include revenue that has been earned but not yet invoiced or received, as well as expenses that have been incurred for which bills have not yet been received or paid. In order to reflect the complete monthly operations of a business, accounting adjustments should reflect these items. If you want to learn more about how Mosaic helps finance and accounting teams assume a more strategic role in the business, reach out for a personalized demo. Or, download this month-end close checklist template and put yourself on the path to a 5-day close.

Tribal knowledge abounds, and tasks can be easily overlooked, especially if a key person is out for a few days. Chances are, you probably don’t have time to record transactions every day. If this is the case, make sure you write down your purchases and organize receipts.

Centralize, streamline, and automate intercompany reconciliations and dispute management. Maximize working capital and release cash from your balance sheet. Simplify, standardize, and automate your financial close in SAP. Perform pre-consolidation, group-level analysis in real-time with efficient, end-to-end transparency and traceability. Reduce risk and save time by automating workflows to provide more timely insights. Drive visibility, accountability, and control across every accounting checklist.

Below is a brief overview of the month-end close process in SoftLedger, or you can see a more detailed walkthrough of the month-end close process. Open Banking API Integration SoftLedger is entirely programmable via the Open Banking API, enabling instant financial data consolidation. Set deadlines for the account closure process and specify your ideal time frame for each task. As a result, everyone with a specific role in the process knows what needs to be done and by when.

In accounts receivable, accruals are used to report revenue earned during a given month that have not yet had their transactions recorded. Whether it’s revenue, invoice payments, or loans, you need to record all the funds your organization received during the month in question. Cross-check to ensure the invoices you have sent have been paid. To ensure your month-end close is as smooth and painless as possible, it pays to follow a month-end close checklist. A checklist will help you keep track of essential information and minimize time-consuming errors and redundancies. Traditionally, month-end closing has been regarded as a time-consuming and occasionally frustrating process—a sort of “necessary evil” in bookkeeping.


These may include bank statements, financial statements and balance sheets, fixed assets and inventory, Accounts Receivable and Accounts Payable documents, Petty cash fund and General Ledger data. Most accounting software packages perform this process invisibly when a box is checked to close the books. All you really see is the end result — a set of balanced financial statements, including a Balance Sheet and Profit & Loss Statement, and a general ledger ready for the next accounting period.

It helps you to balance books, checks cash, and bank account and prepares financial statements. For example, if you are a CPA firm, then at the end of every month your clients will send their invoices to you. After getting these invoices from them, you need to regularly check that all transactions have been recorded properly in your accounting system before sending them back for approval or rejection. Review all cash transactions and reconcile bank account balances to create a foundation for your financial statements, cash flow analysis, and any cash flow forecast. Finalize journal entries in your ERP and save credit card/bank statements for your records.

Yet, if you conduct the process manually and a key person is out of office, you run the risk of bottlenecks and key person dependencies. Beyond collaboration and transparency, automation tools also offer visibility into insights. This allows for leaders and stakeholders to make informed decisions and also set up triggers in the event of errors or impending business risks. However, automation offers visibility and transparency so that every stakeholder will be able to collaborate or review the status of month end closing. Additionally, everyone gets to be on the same page and also rectify any potential issues before significant problems arise.

Companies that wait until the year-end to produce their financial reports are likely to find it time-consuming and challenging. Most firms create monthly financial statements to receive a continuous standpoint of their financial KPIs and to make the year-end process go more smoothly. We hope this checklist and the above tips can help you implement a smoother, more efficient month-end close for your finance team. Investing in automated solutions and integrations can save you both time and effort in closing your books every month while reducing the risk of human error and boosting your team’s efficiency. The month-end close process usually takes 5-10 days to complete, depending on the size and complexity of your company and financial data. That means you could spend up to a third of the month on this process, consuming valuable company time and resources.

Automating some of these processes is a must for many businesses. Accounting software is known to eliminate the occurrence of these errors through automation. Consolidation of all the data sources required for the closing operation.

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Fixed assets are generally big-ticket items that readily convert to cash in the general ledger. Instead, they may generate expenses for your company in the form of repairs, depreciation , amortization , or impairment costs . For the purposes of the month-end closing process, you simply need to record any of these expenses that occur for each of your fixed assets. 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. Sticking to the same schedule for releasing financial statements every month can help you better organize your team’s time and activities.

Categories: Bookkeeping


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