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How To Optimize The Month

month end close process

Automated coordination and orchestration streamlines the hundreds of month end tasks across your entire organization. Integrated workflows ensure that tasks are completed in the correct order and in the most efficient timeframes, by removing the need for managers to waste time chasing up the completion of tasks. Employees previously occupied with keeping data moving are now freed to perform higher-value tasks, such as reviewing reports and complex exceptions. For this article we will focus on financial close checklist management – what it is, its role in the close and how you can tackle the challenges related to it.

This helps to ensure all accounting data is organized, accurate, and complete. In turn, this simplifies and streamlines a number of other accounting procedures, including month-end for each month to come and the annual version of month-end known as year-end close. Once you create a month-end close process checklist in Excel, you can use our financial close management software to automate tasks to save time, reduce stress and maintain accuracy. During the first three business days of a month, two accounting periods are open in the general ledger . Special attention must be taken when processing transactions to ensure they are recorded in the correct accounting period/month.

You can use your calendar to plan out the times and dates to collect financial reports from the different departments when to record the transaction, and finally close the books. No matter how smoothly or properly a process runs, if there is missing or incorrect data, then outcomes could be misconstrued. As such, process integrity checks can be applied to make sure that all records are accounted for in financial statements. Guidance on these journal-related items can be found in the Journal Entry User Guide .

Closing The Books: The Month End Close Checklist

As we’ve mentioned in previous blog posts, increasing manual effort is one way to approach time-consuming projects and processes. However, as manual effort increases, people spend more time on maintenance and issue resolution than they do on innovation. And the risk of errors and inefficiencies also increases as more technologies and individuals are introduced, creating more complex dependencies and manual flag-waving to manage those dependent actions and triggers. This document can be used as a general guide to understand the month-end close policy. Organizations should continuously update and monitor the processes included in this document to ensure that it reflects business operations. Refining your month-end close process is an iterative process if you continually raise the bar to identify better ways to execute.

“Ten days after month end is a good rule before presenting close information. Small improvements made one at a time won’t rush the process but still can have a significant overall impact. And, Billy only gets smarter and better at these processes as Billy “learns” from each invoice action. Aside from fielding phone calls, AP departments also commonly deal with duplicate invoices and invoices that are sent to the wrong person or department and have to be tracked down manually. In addition, your accounts payable records can impact everything from your business’s cash flow to its ability to attract outside investors, its credit rating, and even its borrowing costs. Accrued Payroll and VacationTrace account balance to supporting payroll data for vacation payable and payroll accrual for the period.Specify the correct amount of days’ pay in accrual when you calculate liability. Accounts PayableCheck if the total of accounts payable aging report is the same as the balance on the trial balance.Review if there are any unapplied credits on accounts payable aging.

  • When it fails, frustration mounts, time is lost and the likelihood that your staff will use the unapproved workarounds instead increases.
  • It can also help to safeguard against unforeseeable business interruptions.
  • The University closes each accounting period following a month-end close process in PeopleSoft Financials.
  • Instead, financial data is spread in multiple enterprise resource planning systems across various business units.
  • Once you have broken down the accounts, you can start working on one category and work your way up the others.
  • Monthly close processes serve as a cutoff point for transactions, as they are essentially permanent income statement accounts.
  • If you’re using a cloud-based, automated solution such as PLANERGY, many of these data sources will already be connected, organized, and ready for real-time access, manipulation, and analysis as needed.

If you run your business with multiple systems like e-commerce, CRM, time and billing and point-of-sale, and those are not connected back to your accounting system, your accounting team has to reenter key information. This is not only time-consuming, but also error-prone and a poor use of precious accounting resources. And what’s worse is data in each system rarely matches on the first try. So, your accounting team must spend additional time tracking down the errors in trying to reconcile the systems so that they can create accurate reports. Presenting a complete and accurate representation of the organization typically requires monthly journal entries for accrued expenses, amortization, depreciation, and other activity. In most cases, accounting systems are able to automate recurring journal entries. You can remove unnecessary manual activities by automating the financial close checklist.

Clearly, switching to this technology is about more than just closing the month out quickly. Commission accounting relies on accurate data and accounting standards to be done right. Secondly, if you’re running a public company, you can run the risk of immense damage for having incorrect financial statements. Firstly, it helps to make sure that your financial statements are correct. These statements are used for many purposes, including receiving investment and making important business decisions, so you want the data to be right. Process integrity checks are just one way to make sure that data is right. Organisations can also utilise analytical reviews, which help to verify that General Ledger account balances are reasonable.

Data automation tools like SolveXia collect data from various sources in seconds and match records. If an anomaly exists, SolveXia will notify its user on the spot so that it can be investigated and rectified.

Tips For An Efficient, Successful Month

With that being said, there are other formats in which you can report your data–such as a KPI dashboard. Organize and review your financial statements so you don’t overspend or miscalculate other things later on. When conducting a month-end close procedure, you’re essentially recapping all your progress during the month and setting your numbers in stone. By initiating month-end close procedures you’ll also be able to set more attainable goals for the future and accurately track business performance just in case you need it later.

month end close process

In accounts receivable, accruals are used to report revenue earned during a given month that have not yet had their transactions recorded. To ensure your month-end close is as smooth and painless as possible, it pays to follow a month-end close checklist.

Importance Of Closing Books Monthly

Frequent reconciliations of key accounts — such as cash — reduce the work needed to close the books. Closing the books quickly gives them the opportunity to take corrective action as soon as possible. It also frees up the accounting department to devote more time to providing management with better information.

If your business can’t handle monthly fluctuations in AP output without adding a whole new full-time employee to the team, you’ve got a manual labor problem. Accounts payable of course have a big impact on the final expenses which you have to address when it comes time to close the books. Well, since then an effective account team has generally been expected to close their books, with accuracy, in the span of one business week at the end of each month. A “fast, clean close” has been the mantra of many a finance and accounting department since as far back as the 1990s. EquityConfirm that the personal expenses of the owner are documented properly in the drawing or receivable account.Confirm that the earnings that are retained or capital conform to balances on prior year tax return.

Complete All Transaction Processing And Clear Approval Workflows

You want to close out a month so that you have a solid record of what happened during that month, with no chance of numbers moving around or shifting after the fact. Using a robust, cloud-based FP&A platform for automating month-end close operations can complete processes that once took weeks with the click of a button. Now, generating P&Ls and incorporating them into models is just a single keystroke away, effectively saving finance up to two weeks every month. Every business leader recognises the value of a month end close process that is error-free and easy to perform. If you want to get started using automation to better manage month end reconciliation and financial close, request a free demo with a data automation tool to learn more.

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Working papers are your reference for the month end closing procedure. These papers show all adjustments and calculations as you reconcile all major accounts for the period. If everything is correct each Ledger results in a zero balance for the month end closing. A month-end close checklist is critical to ensuring a smooth and successful close process. Its purpose is to provide visibility into the status of each task, manage resources or deadlines, and reduce confusion as turnover happens or roles and responsibilities change. Closing your books at the end of each month might not be the most exciting part of running a business, but efficient and accurate monthly closings are important for any organization. Month-end closings are not only essential to effective fiscal governance, they also provide management with financial information that drives strategic decisions.

Benefits Of Using Financial Automation For Month

The BlackLine Accounting Cloud is a leading accounting software platform and has helped thousands of accounting teams make the move to modern accounting. BlackLine solutions unify systems, data, and processes to unlock global visibility, automate repetitive work to focus on what matters most to the business, and deliver continuous real-time information and analysis. Also, departments whose activities impact financial records should be enlisted to complete activities on an ongoing basis. They should ensure the accounting department receives complete and accurate source documents to record information into the accounting system. Workflows give employees ownership of each activity and lay bare the interdependencies of their tasks. Role-specific overviews of your close checklist management – from group controller down – put you in control of the process and allow you to set the parameters for the granularity of detail they need to see. No financial controller wants to miss the financial close deadline, because period trial balances must go into the group close where the figures are used by the markets and investors.

month end close process

The completion of one task needs to trigger the next but delays and bottlenecks at any point along the checklist is the source of much frustration. For team members operating in isolation, it is very easy to lose track of where you are in the process, particularly if people aren’t aware of the relationship between tasks. Without an umbrella view of activities and an intelligent means to orchestrate their completion, it is extremely difficult for organizations to see where they are in the financial close process. These fixed assets that your company may own will depreciate as time goes by, so it’s useful to keep up to date with these depreciations to get a better idea of their current worth.

Monthly Closing

If errors arise or there are updates that need to be implemented, finance has to call on IT. If there’s a bug that no one on the finance team can figure out, finance has to call on IT. When Capitol Petroleum Group discovered that their consolidation process was slowing down their whole month-end close, this is exactly what they did. When you face any challenging situation, it’s often useful to break it down into parts. Some companies realise the benefit of reconciling high-risk accounts daily, or at least more frequently than on a monthly basis. These reports will help isolate revenue that can be accepted for the month, and sales that need to be pushed to the next period. Part of the document collection process is updating our vendor list, to include only approved vendors.

Ultimately, month end close requires that various team members be in the loop and sequentially complete their tasks without delay. Management, regulatory agencies, lenders, and stakeholders all rely on accurate financial statements to make their decisions. In order to ensure that a company’s financial position is properly reflected, the month end reconciliation process is required. Rounding out the month end closing procedure is the working papers phase.

Approve A Feeder Journal

End-to-end intercompany solutions facilitate the process with defined workflows, embedded controls, and automation. The figure below provides a visual overview of the process and key activities. Accelerators Optimize your accounting processes with a catalog of on-demand expertise.

If you are disciplined and implement Day Zero and other month-end processes, you can provide a Flash Report of results to management as soon as Day 1 after month-end. Document your processes with Standard Operating Procedures so that all team members have steps to follow should any one team member need backup. Learn about when journal entries are processed and closed for the month. Understanding how finance and accounting professionals differentiate financial forecasting and financial projections, and what business leaders want to know, as you plan for this year and beyond…. Desktop spreadsheets in general—and Excel, in particular—have long been staples of finance departments.

Leading solutions also help centralize supporting documents and provide dashboards for reporting on status and KPI’s. Before reporting, Accounting must capture, review, and make adjustments to data from these disparate sources, which often include a primary ERP, other ERPs, sub-ledgers, banks, point-of-sale systems, and many others. When results are solidified and reviewed, accounting then reports results to stakeholders including internal management, external shareholders, regulatory bodies, and others. Management is often eager to get their hands on financial information that will inform their decisions.

month end close process

Being able to preempt any late tasks and having full visibility over the elements that are likely to have an impact on the deadline is critical. Gaining that company-wide visibility without automation relies on trawling through close checklists manually, which is neither efficient nor failsafe. The knock-on effect of aspects of the financial close not being completed in the right order can be catastrophic. Features Overview Give IT full flexibility with managed cloud-based job scheduling. Event-Driven Process Automation Easily create and orchestrate business processes for real-time results with Redwood’s automation. You should have an excel table to record all your transactions if you don’t have the software necessary. There are so many people that rely on an excel spreadsheet to view the information and make critical decisions, so when creating a month-end checklist with excel–precision is key.

  • However, if flux analysis is performed manually, it turns out to be time consuming and tedious.
  • Features Overview Give IT full flexibility with managed cloud-based job scheduling.
  • Ideally, some items on your checklist are related to your financial accounting system and some will be related to your management system .
  • Be the first to know when the JofA publishes breaking news about tax, financial reporting, auditing, or other topics.
  • The solution is to make a shift away from spreadsheets to a Cloud Suite that automatically pulls data from cross-business systems, eliminating errors and getting rid of concerns about version control.

When It’s Time to Outsource a CFO I often get asked about why companies should outsource CFO services. As small- to medium-sized businesses grow, they need additional financial re… He wanted to take the best ideas from the electronic medical records world and apply them to heavy-duty repair. Today month end close process Fullbay is the number one fleet repair platform in North America. Jacob is a CPA licensed in Arizona, has a Master’s degree in Accounting, a cellist, a so-so surfer, and the father of eight children. Million-dollar debuts and overnight successes make the front page of the papers all the time.

Author: Kevin Roose

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