Month-end Closing Procedure and Checklist

month end closing process

In order to “close the books” and set the financial records in stone, so to speak, companies cross off the month end closing checklist. This helps the company to simplify tax filings, better understand the business’ financial health, and enables better decision-making abilities. The month end close process is a complete review of financial activity and performance for an entire month and the preparation of monthly financial statements. It supports your ability to conduct quarterly and year-end financial closes accurately and efficiently. Large hassles during the month end closing process might be an indication of underlying issues with your business’s approach to accounting. Of all the processes the finance team covers, the month end close process especially deserves your attention.

Month-end close requires accurate and organized financial statements, including your general ledger, balance sheet, and profit/loss statement. You’ll use these documents to establish your listing of final balances for all accounts, known as your trial balance. The purpose of the trial balance is to show that your financial records are properly balanced, with a net balance of zero for all credits and debits. So, a final review is always done before the closing process is completed. This review is done by the top management or someone who wasn’t involved in the closing process to get a fresh view of all the data once again.

How Do I Close a Month End in QuickBooks?

Remember, the sooner you get the books closed, the sooner you can do the cool stuff in accounting. Month-end close checklist and have some sort of month-end real estate bookkeeping close process. On one end of the spectrum are the accountants, controllers, and CFOs who keep it all in their heads and use a lot of manual processes.

month end closing process

Account reconciliations and other workpapers and Excel spreadsheets contain errors because someone made changes to the trial balance. Gather your team for a pre-close meeting to discuss your schedule and timeline. Ensure everyone knows what tasks they’re responsible for completing. This is also a good time to discuss issues that arose during last month’s close and make a plan for mitigating them, if possible. Besides having a well-thought-out plan and month-end workflow, let’s review some best practices that can help make your end-of-the-month processes go as smooth as possible. Cash distributions or dividends paid out to owners during the period need to be closed out to Retained Earnings so that the balance reflects the earnings that the company retains for future needs.

Consider a Centralized Solution Where AP Employees Can Easily Access and Process Invoices

That can work for a while, but as the accounting department grows, that process can become total chaos. Tribal knowledge abounds, and tasks can be easily overlooked, especially if a key person is out for a few days. Technology can streamline many of the time-consuming and manual month-end close tasks. So take advantage of tools that assist with collecting data in real-time, reconciling accounts, and running calculations to speed up the process while avoiding errors. 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.

As you can see, with the progression of time and evolution of technology, the account close process can be shortened. With automation solutions, you don’t have to sacrifice accuracy for speed because you gain both when using financial automation software. As you go through the month end closing process and checklist, it’s useful to keep in mind these best practices to reduce errors and keep everything running as smoothly as possible. Beyond the accounting parts, you’ll have to reconcile and cross-check bank forms, outside entries, and account statements. You’ll have to reconcile items like your credit card statements, cash, checking and savings, prepaid accounts, and the like.

Month-End Account Closing: How to Close Your Books and Why It Matters

Ultimately, the goal of your finance and accounting teams is to create accurate financial statements for the month. The month end closing process is a procedure that accounts for all of the previous month’s financial transactions. Your accounting team reviews, records, and reconciles all relevant account information.

  • There’s no getting around the fact that these procedures take time and effort, and you need to continue day-to-day operations at the same time.
  • Without manual tasks, you can also easily standardise the process.
  • The lack of a clear communication channel where external vendors, approvers, and AP team members can address the questions that keep certain invoices in limbo.
  • Match, analyze, and reconcile millions of transactions in minutes.
  • With up-to-date records, you will save time catching up with your financials during the month-end process.

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