Chaotic, stressful, and frustrating- these are some terms that are often associated with the month-end close process. But, the reality is that the month-end close process is crucial and its effectiveness determines the accuracy and timeliness of financial reports. In fact, a company’s financial decision-making and credibility are heavily dependent on this periodic activity.
With the right tools and methods, the month-end financial close process can be transformed from a time-consuming and cumbersome task to a streamlined one. One of those methods is leveraging a month-end close checklist.
To help you take control and manage your close process seamlessly, this blog provides you with a month-end close checklist, helping you close your books effortlessly each month.
Let’s dive straight into how businesses can efficiently close their books at the end of the month. A checklist is an ideal way to ensure that you are not missing out on any crucial steps, preventing any potential issues down the line.
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Download AI GuideThe following month-end close checklist lists down all the steps a company needs to take to generate accurate and timely financial reports.
The first step in the month-end close process is to ensure that all the financial data for the month is collected and uploaded on the accounting system. This enables companies to finalize and process all the transactions for the required accounting period.
Key considerations:
Once all the transactions are reviewed and recorded, the next step is to post all the closing entries in the general ledger for the month.
Key Considerations:
After posting closing entries in the general ledger and/or sub-ledgers, the next step is to perform reconciliations for all the accounts in order to ensure their accuracy. The reconciliation process is a critical part of the entire month-end closing process, enabling organizations to identify discrepancies and maintain financial integrity. For optimal results, businesses should leverage an automated accounting system that automates transaction matching based on pre-defined algorithms.
Accounts to reconcile:
During the reconciliation process, an important step is also to rectify any errors or omissions you come across. An automated anomaly detection software is the best option for handling exceptions seamlessly and ensuring enhanced accuracy.
With reconciliation completion and rectification of all discrepancies, the next step is to compile monthly financial data and create financial reports.
Reports to create based on your business requirements:
Once all the necessary reports for the required accounting period have been created, review them thoroughly to ensure the accuracy and completeness of all the financial information. At this stage, you can make any necessary corrections before finalizing and releasing the reports.
After generating all the financial reports, you need to analyze and interpret to be better prepared to share insights, share feedback and present findings to stakeholders.
Key considerations:
It’s no surprise that accountants often have to work long hours at the end of financial periods. This is because the financial close process requires meticulous attention to detail. However, what poses significant challenges for accounting teams are common errors that further makes the process cumbersome.
To overcome these challenges, it’s important for businesses to identify these mistakes they are making during the month-end close process. Here’s a list of common mistakes that can make the month-end close process time consuming and stressful:
Now that we have familiarized ourselves with the common challenges businesses face during month end close, let’s understand the benefits of utilising a month-end close checklist template.
Here are are the key benefits of a month-end close checklist:
One of the major challenges in month-end closing is the time it takes to complete the process. Most organizations take around 5-10 working days to complete the month-end close, and most businesses struggle to reduce this timeframe. HighRadius’ financial close software helps businesses accelerate their month-end close, making it faster, smoother, and error-free. Our AI-powered transaction matching software and anomaly management systems gives access to real-time data and proactively identifies errors. Additionally, it also automates manual tasks like financial data collection and reconciliation.
HighRadius’ account reconciliation software ensures that all balances are accurate and consistent across your financial statements. By automating reconciliation, businesses can reduce errors and improve efficiency. Transaction matching enables rapid comparison of large transaction volumes, significantly speeding up the reconciliation process while identifying and resolving the discrepancies in real-time. Substantiation provides robust documentation to verify the accuracy of financial entries, enhancing compliance and reliability. Journal entry software streamlines the creation, approval, and posting of journal entries, drastically reducing manual effort and potential errors by automating 95% of journal posting.
Together, these solutions from HighRadius transform your financial closing process, enabling a seamless, efficient, and accurate month-end close. Businesses can achieve a zero-day financial close and reduce their month-end close time by up to 30%, ensuring timely and precise financial reporting with 100% accuracy.
1. What is end-of-month reporting in accounting?
The process of creating, reviewing, and finalizing financial statements at the end of the month is referred to as the end-of-month reporting. It is a crucial process for business from the viewpoint of strategic and financial decision-making, and therefore, should be approached with utter seriousness.
2. What is a month-end close checklist?
A month-end close checklist outlines all the important steps a company needs to take in order to achieve an accurate and timely month-end close. A checklist is the ideal way for businesses to approach the month-end close process as it enables them to be more strategic and achieve a faster close.
3. What is a month-end close process?
During a month-end close process, a company reviews all their transactions, reconciles all accounts, and handles any errors or anomalies in the recorded financial transactions. This is done to ultimately create accurate financial statements at the end of the month and review the company’s financial performance.
4. How long should the month-end close process take?
On an average, businesses take about 5-10 days to complete the month-end close process. This number can vary depending on the size and complexity of the business. There are also steps, like using a month-end close checklist and leveraging automated accounting solutions, that companies can take to accelerate the month-end close process.
5. What role does technology play in the month-end close?
Traditionally, the month-end close process has been a time-consuming and stressful process for finance professionals. The use of advanced technologies however, has made the process much more simpler and efficient by automating tasks such as data entry, reconciliation, and anomaly management.
6. Can the month-end close process be accelerated?
Yes, the month-end close process can certainly be accelerated. Here are a few ways in which companies can achieve a faster month-end close:
7. How can a company improve its month-end close process?
A company can continuously improve its month-end close process by leveraging a month-end close checklist, automating tasks like data entry, transaction matching, and anomaly detection and resolution, and ensuring the documentation of all effective workflows and processes.
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