FloQast’s suite of easy-to-use and quick-to-deploy solutions enhance the way accounting teams already work. Learn how a FloQast partnership will further enhance the value you provide to your clients. For accrued expenses, talk with the usual suspects to determine material accruals you’ll need to book each month, typically for legal services, professional services, and often marketing expenses. Over time as you iterate on your month-end process, you’ll continue to add in accruals for any vendors that bill in arrears. AP accounting will also require instituting a hard cut-off after which any new invoices received are recorded for the next accounting period and expenses from those invoices should be accrued. Simple changes to automate account reconciliations, departmental allocations, and recurring calculations can save time and reduce errors.
Prepare financial statements
- Reviewing and reconciling balance sheet accounts ensures that all transactions have been recorded and accounted for.
- Always have a record of daily operational transactions, ideally the moment they’re made rather than waiting until the end of the month.
- Other departments and providers may not understand the need for timely information.
- But a more streamlined month-end close process leads to fewer mistakes across your entire accounting procedure.
- Start by accurately compiling your account statements and recording all expenses and income for the month.
Regulatory bodies and tax authorities require companies to submit accurate financial reports. Properly executed month-end closes help finance teams ensure compliance with legal obligations. Now that you’ve got some knowledge under your belt about the month end close process, the next step is to create a checklist to streamline your closing procedures. With cash basis accounting, you won’t have balance sheet accounts, such as accounts receivables and accounts payables. To learn more, see our guide on Cash Basis Accounting vs. Accrual Accounting. Sticking to the same schedule for releasing financial statements every month can help you better organize your team’s time and activities.
Confirm Transactions for the Period
Bank reconciliations will also help you understand your cash situation and not overdraw your account. With account reconciliations, you’ll spot mistakes in your financial data and fraudulent transactions (if any!). Check if you’ve posted debit and credit entries accurately month end closing process for all the transactions. Next, review if you’ve posted your journal entries correctly into your general ledger. If you’re not recording your expenses in real-time, attempt to record them weekly. If you fall behind, catch up on your backlog ahead of the month end process.
Communicate company cut-off dates
Now that you’ve got the general month-end process down, you can start divvying up the tasks among your team members. Starting with a complete checklist can help you get started as you optimize your processes to speed up the close. Remember, the sooner you get the books closed, the sooner you can do the cool stuff in accounting. 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.
Automate Processes
Also, if you are using a new financial system, it’s helpful to keep a notebook of tips learned from other users for future reference, Villani said. Remember that while the close process can seem routine, it’s essential to the business—and https://www.bookstime.com/ often to a young CPA’s development. “It is not exciting to close the books, but it is important,” said Zeeshan Baig, CPA, CGMA, manager of Financial Planning and Analysis at G&K Services and a graduate of the AICPA’s Leadership Academy.
Other departments can be of use in the month end closing process, not just the finance team. They’ll be able to help provide documentation of financial data if they know what’s going on. When you have reconciled all accounts and ensured that your general ledger is up-to-date, then you’re ready to prepare financial statements. Instead of doing this manually, you can again leverage automation tools to do it for you. In conclusion, while the month-end close process may seem repetitive, it plays a pivotal role in maintaining your company’s financial health. Embrace it as a proactive tool to navigate the dynamic world of finance, ensuring accuracy, compliance, and strategic advantage for your business.
The month-end close is typically completed within 10 days of the end of the month, such as having a deadline for May closing on June 10th. In this blog, we will dive into what the month-end close process is, its importance, how to perform it, and best practices to close the month early. “It’s important to be efficient and learn to meet closing deadlines,” said Samantha Villani, Financial Services Audit Senior at KPMG LLP. “Use an Outlook calendar, and set individual work goals for the day and the week. Don’t leave the office for the day until the day’s goals are met.” She adds that it is helpful to participate in staff meetings to discuss timelines and deliverables so everyone understands expectations.
- Get help from others in your business to address any issues right away, or hire someone who can help.
- Many young CPAs start their accounting careers either involved in closing the books or in auditing them.
- For a smoother process, it’s beneficial to make consistent and regular journal entries for all transactions impacting financial records, ideally daily.
- Keeping track of revenue from product sales and services ensures that your business is on track with your forecasted ARR and sets you up for compliant tax filings later.
- The most important reason is that without properly closing the month, your financial statements will not be accurate and can negatively impact the company.
- The month end close process consists of a robust review of the financial activity that occurred in the prior period.
Record income and expenses
For example, if you don’t accrue payroll for the month then your payroll expenses for the closed month and the following month will be inaccurate. Review inventory data to reconcile physical stock with recorded quantities if your business deals with inventory. Granted, what we’ve covered today looks magnificent on paper, but your organization doesn’t operate on a sheet of 8.5×14. The point is, establishing estimates and materiality thresholds isn’t necessarily a walk in the park.
AP Automation
This way, you can focus on your business, knowing your financial matters are in good hands. If you’re struggling to keep up with your books and the month-end close process, you can outsource your bookkeeping to Bench. To avoid mistakes, review your financial information before the month-end close. Ask someone who didn’t prepare the accounts to review them so they’ll find errors or problems you didn’t notice.
