Thus, a centralised system like SolveXia can solve more than half the challenges of the month end closing process. Rather than having your team sift through data manually and collect it across departments, systems and desktops, SolveXia will connect to all your systems and centralise all your crucial data. Then, the system will automatically perform transaction matching for account reconciliation, streamline approval processes, and generate reports.

Doing so reduces your reliance on last-minute records from external accounting. Accurate reporting allows top management to identify and correct performance problems. In addition, creditors, investors and analysts can assess the company’s overall performance and financial condition. A thorough review allows you to feel confident in your month-end close. If you find any errors or areas of concern–such as overspending within a specific department–address them right away. It’s generally best to start with bank accounts, but it’s most important to implement a reconciliation system that works for you.

Step 3: Close Your Books in QuickBooks Desktop:

If you are required to complete the closing process within a week, and you know that the timeline is unrealistic, then communicate it beforehand. All accounts on the balance sheet, like cash, savings, and checking, must be reconciled. Technology can also be used to standardize account reconciliations and automate the creation and processing of the thousands of journal entries businesses inevitably work with. The elimination of manual data entry is usually the first selling point accounting teams look forward to, but the advantage here extends beyond that.

Inaccuracies and delays in the close will derail each of these processes, hurting your standing with investors as you struggle to explain the “why” behind your numbers. Knowing about the major one-off expenses coming down the pipeline is crucial for marketing, finance, and accounting alignment. But trying to chase down updates in Slack messages, via email, or in person can slow you down. Business partners are no longer content with long reporting cycles—they want faster insights from financial information. And you get faster insights by automating tedious, time-consuming tasks.

• If you find any errors or areas of concern–such as overspending within a specific department–address them right away.
• While the closing process may be time-consuming, it’s essential for keeping your business running smoothly.
• A fully completed set of financials from the previous month can also be used as a foundation for next month’s business decisions, as a closing period highlights areas where you can improve.
• The month end process flowchart is a visual representation of each step of the process, outlined in sequential order.
• You can also check your account statements for evidence of fraudulent transactions.

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. The month-end close process involves accounting teams collecting, reviewing, and conforming transactions and financial activity from the previous month. It is used to ensure accuracy and compliance while maintaining data integrity for financial planning and analytics. Ultimately, the goal of your finance and accounting teams is to create accurate financial statements for the month.

Statements

The best way to manage financial close at month-end is to implement best practices around the month-end closing process. Accurate financial statements are also needed to prepare a budget for your business, and accuracy in financial reporting is an absolute must for tax compliance. The most important reason is that without properly closing the month, your financial statements will not be accurate and can negatively impact the company. Learn from your mistakes and do better the next time; you will improve with time.

What are the biggest challenges of the month-end close?

After all, as mentioned earlier, each company has unique requirements for a monthly report. During pre-close meetings, the team should discuss follow-up items from the previous month’s post-close meeting and determine the current month’s close schedule and timeline. You should also determine what staff should do if they run into barriers and how they should communicate any bottlenecks. Like all deadlines, the month-end close can be a source of tension for some organizations. However, with proper preparation and systems in place, it is a source of reliable information and a sound business practice.

tips to optimize your month-end closing process

Staying on top of your numbers and closing your books every month is important to keep your business on the right track. By preparing ahead for the month-end, you’ll avoid the last-minute rush and have a smooth closing process. They are an asset you’ll recognize as expenses in different accounting periods. If you’re fighting for time, aim to catch up with your reconciliation ahead of the month end close process.

Here’s our month-end close checklist to help you organize your workflows. Small business owners have their plate full with daily business operations, so it’s normal to dread the month-end admin. Month-end reports should also contain a month-over-month comparison of important business metrics to evaluate performance comparing current month to the previous month. You need to know exactly where things stand to offer accurate reports to your board leaders and executive suite. Vasco noted how Mosaic has been instrumental in building out quarterly board decks and running flux analysis to compare financials period over period. Complete an inventory count and check the numbers against what you have in your books.

Be sure that anything in a draft form is taken care of and be aware of any recurring transactions that haven’t gone through. Advanced analytics leverages techniques to provide insights about the past, present and future. Browse hundreds of articles, containing an amazing number of useful tools, techniques, and best practices. Many readers tell us they would have paid consultants for the advice in these articles.

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To that end, organize the receipts and write down all your purchases. Cross-check your records during this step to make sure everything has been paid. If you walk away with one takeaway from this article, it would be to establish and maintain a process to handle your monthly closings in your business. With the state of today’s economy, it is important that businesses can trust their financials.

Those numbers are a bit faster than APQC found in 2018, where the median close of 2,300 organizations was 6.4 days. The top 25 percent in that survey were closing in 4.8 days or less, while the bottom 25% needed 10 or more days. If done right, the order-to-cash cycle can provide your organization with improved cash flow and customer satisfaction, reduced costs and forward movement toward corporate sustainability. By clear communication, setting aside enough time, and celebrating successes, you can help to make the month-end close process a positive experience for everyone involved.