Content
This process involves several steps your team will complete over several days. Plus, accurate monthly reporting makes year-end closing much easier to understand. Once all of these tasks are completed, you’ll be ready to follow the specific instructions for closing the books in QuickBooks, Netsuite, or Sage Intacct. Thanks to technology, the close has been getting steadily faster, according to surveys by Ventana Research.
All this creates unnecessary steps in the month end close process , delaying your ability to close the books. Without automated processes, accounting teams spend a lot of time each month entering data and double (and triple) checking for errors in calculations. This compounds the stress placed on a swamped accounting team, leading to unwanted errors. The month end close is important because it’s what enables you to produce the financial statements you need for analysis and decision-making. Any delays in completing monthly close procedures can have downstream effects on your business’ ability to complete critical functions like budgeting and forecasting. If you’re here reading this, then you’ve probably dealt with the challenges of the month end closing process yourself.
However, here’s an ideal flowchart that can be followed for a month-end close process depending on the roles, deadlines, and processes. Some small business owners underestimate the importance of the month end close process. They may not see how tracking what happened during the previous month helps them set a company up for success in the future. Now you need a checklist that ensures you have all the data you need to complete those steps. This month end checklist helps you gather the information you need before your monthly close date. As such, it’s a good idea to ask somebody who didn’t prepare your accounts to take a look at them.
This reduces not only the manual work your team has to go through, but also errors, bottlenecks, and delays in the financial close. One example of this is integrated payments software, which allows you to process payments directly from your accounting system. This means you can automatically post incoming cash to its corresponding invoice(s) as it comes in, saving you the task of doing this come month end. Beyond collaboration and transparency, automation tools also offer visibility into insights.
Once the general ledger has been updated, the next step is to prepare the financial statements, which can be done either with compiled data in a spreadsheet or automation tools. 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. Like any business process, if your month-end close is built on a shaky foundation, there will be problems.
Incorrect recording of data, expenses not captured, or captured expenses coded incorrectly are potential problems from a poorly designed process. Without the ability to capture accurate financial data, you won’t deliver reliable reports in a timely manner. 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.
Furthermore, any adjustments made during the course of the month should also be applied accordingly. Streamlining the process also means teams can address any issues early in the closing process rather than waiting until after all data has been posted. An effective closing process ensures that sales transactions are recorded accurately and on time, which allows businesses to better understand their current cash flow position. HighRadius Autonomous Accounting Application consists of End-to-end Financial Close Automation, AI-powered Anomaly Detection and Account Reconciliation, and Connected Workspaces. Delivered as SaaS, our solutions seamlessly integrate bi-directionally with multiple systems including ERPs, HR, CRM, Payroll, and banks. Month-end closing is among the most critical accounting processes for every business.
It also automates manual tasks like financial data collection and reconciliation. 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. Each company is different, so it’s impossible to say how long your month-end close should take.
Accounting systems automate the process of closing entries within a few clicks, but this is only possible with accurate recording of transactions. An accounts payable solution ensures that all payables are recorded at the point of transaction, removing manual data entry and errors that cause delays in the closing https://www.bookstime.com/ process. Once a company has created a month-end close process for closing the books, management will benefit from timely and reliable information. Up-to-date accounting records and monthly bookkeeping can provide management and other decision-makers with a current picture of how the business is performing.
Seeing that speed and accuracy are the most critical skills in the month end close process, we have created a free month end close template to streamline your team’s month-end projects. You will prepare the income statement and retained earnings statement for the period. The income statement shows in detail all revenues and expenses for the period. It also includes an account called “net income,” which is calculated by subtracting all expenses from total revenues. Before you completely close the accounts at month-end, consider having a second set of eyes review your work. The person reviewing your accounting information could be a manager or supervisor who has experience handling your books.
However, if you use accounting software such as Xenett, you can cut down the review time by 70% and speed up the closing of your books by 80%. Xenett eliminates the hours of manually reconciling accounts and correcting errors in your financial books. It is the ultimate accounting software solution for bookkeepers, accountants, CPAs, business owners, and other accounting professionals. Xenett automates and streamlines your month-end and year-end close processes, eliminating the time-consuming effort. Automation is the key to reducing the time and effort required for the month-end closing process.
This process is notoriously cumbersome as many accounting teams lack the systems and tools to handle these workflows smoothly. But, this doesn't have to be the case. Here's how. The month end close is one of the most important accounting processes for businesses of all sizes.
Stay up to date on the latest corporate and high-level product developments at BlackLine. Our API-first development strategy gives you the keys to integrate your finance tech stack – from one ERP to one hundred – and create seamless data flows in and out of BlackLine. If you recently attended webinar you loved, find it here and share the link with your colleagues. World-class support so you can focus on what matters most.BlackLine provides global product support across geographies, languages, and time zones, 24 hours a day, 7 days a week, 365 days a year. We are here for you with industry-leading support whenever and wherever you need it.
It involves checking all income and expenses and comparing them with records. The monthly close process is a critical step in the accounting cycle. It provides an opportunity for managers to review and approve financial statements and other reports, as well as make any necessary changes before closing out accounts at the end of each month. Each month your business will undergo an accounting month-end closing process to identify discrepancies, verify business account balances, and generate monthly financial statements. This blog will help you with your first-hand experience on month-end 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. Using Google Sheets and Layer, you can set up data collection forms and use templates for different types of financial documents you need.
You can prepare a month end close checklist based on the steps given. Follow this checklist, and the close process every month will no longer be troublesome. At month-end close, review your revenue and expense accounts to confirm they are accurate. Check to see if you recorded your expenses in the correct accounts for the period. Be sure that accruals and prepaid expenses are recorded accurately in your books.