Month-End Close Process: Meeting Financial Deadlines
These are some common ways to use SaaS accounting software, financial close software, and other tools to automate aspects of your month-end close process. It serves as a mandatory fiscal reporting requirement for certain companies, ensuring compliance with financial regulations and standards. It helps in tax filing, preventing accounting errors, and getting an overall picture of the company’s cash flow scenario. The bank reconciliation process is the same as the accounting reconciliation process.
Smaller companies may have fewer accounts while multi-nationals will have hundreds or thousands. Here is a month-end close process flowchart to visualize some of the key steps and processes. Since our founding in 2001, BlackLine has become a leading provider of cloud software that automates and controls critical accounting processes. It’s time to embrace modern accounting technology to save time, reduce risk, and create capacity to focus your time on what matters most.
Finding the Solution with Automation Tools
When everyone understands their responsibilities, they can focus on completing their assigned tasks efficiently. By working together towards a common goal, your team can streamline the month-end close process and meet important financial deadlines without unnecessary stress or delays. Checking your fixed assets is an important step in the month-end close process.
Reports that contain errors or missing details jeopardize the integrity of the company’s books. With so many decisions and assumptions riding on the precondition of accurate financial reporting, it’s imperative that teams create total visibility in their data. Analyzing month end close process financial statements helps management make informed decisions about the company’s financial performance and identify areas for improvement. One of the key ways FreshBooks can help is by automating many of the repetitive tasks involved in the month-end close process.
Step 3: Reconcile Continuously
Also, in the year-end close process, income and expense accounts are “reset” in preparation for a new year-to-date account. Closing procedures at the end of the month typically take about eight days in a high-growth B2B SaaS company but can take as little as five days in a small business. But the shorter you can make your timeline, regardless of business size, the better. The workflow should cover the entire process, from ensuring customer payments before the closing date to flux analysis and delivery.
Missing or incorrectly entered transactions can cause all sorts of problems, resulting in costly delays or inaccurate data. Additionally, tracking down various invoices or receipts needed to prepare account statements can be an extra challenge during month-end close. The month-end close in accounting is a critical step that keeps the books balanced and up to date. At the end of each month, accountants go through all transaction records from that period and make sure each has been properly entered into the proper accounts. The team must manually upload data to the accounting system for the accounting department to process month-end goals.
Month-End Close: Steps, Checklist, and Best Practices
Dashboards and notifications additionally monitor the progress in real-time and give management an idea of what to do next. This level of visibility ensures that everyone is on the same page and that issues are spotted before they become significant problems. Accounting systems aren’t homogenous entities; they usually come in modules covering specific purposes such as an accounts payable and an accounts receivable department. Part of the closing process is reconciling all these components together. The exact approach to the monthly closing process differs depending on the type of business and its specific accounting methodology.
For a smooth month-end close process, all working units of the company should follow consistent patterns of financial recordings, such as the generally accepted accounting principles (GAAP). Following these best practices will not only improve efficiency but also increase confidence in your financial reporting accuracy—allowing you to meet critical deadlines consistently. Occurrences like this could double the entire month-end process and will surely have a knock-on effect to other accounting processes. Back up your data using a reliable cloud-based system that can be stored securely. The key benefit to using templates within your financial close is that they standardize operations. Creating a standard operating procedure is proven to improve the speed and accuracy of your month-end process.