Month-End Close: Steps, Checklist, and Best Practices

25 August, 2022
5 mins
Patrick Petti, AVP, Value Optimization

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10.09 min

Table of Content

Key Takeaways
What is the month-end close process?
What are the steps in the accounting close process?
What is a month-end close process flowchart?
Why does month end close take time?
What are the best practices to improve the accounting month end close process?
What is a month-end closing process checklist?
Top 5 advantages of using a financial close solution
How can HighRadius help in your month-end closing process with automation?

Key Takeaways

  • The month-end close process is a systematic way of maintaining financial records and involves reviewing and reconciling financial documents to prevent errors and get an overall picture of a company’s financial health.
  • While the month-end close process can take a lot of time, it’s important to optimize the process steadily to keep errors at bay while reducing the close time.
  • To improve the month-end closing process, businesses should address common challenges like a lack of centralized data repositories, errors in manual records, and difficulty tracking the status of tasks.

What is the month-end close process?

The month-end close process is a crucial process that is done at the end of each month to ensure accurate and timely financial reporting. It involves several steps, including reconciling accounts, reviewing transactions, adjusting entries, preparing financial statements, and analyzing performance.

It serves as a mandatory fiscal reporting requirement for certain companies, ensuring compliance with financial regulations and standards. Additionally, this procedure plays a vital role in helping businesses maintain accurate and reliable records throughout the year, which is essential for making informed financial decisions and facilitating smooth operations. It helps in tax filing, preventing accounting errors, and getting an overall picture of the company’s cash flow scenario.

The month-end close process includes reviewing the company’s balance sheet, intercompany trades, month end journal entries, and other documents (like bank statements, income, and expenses) and reconciling them.

Journal entries of recurring monthly transactions must be performed at the time of the month end close. This applies to such transactions as accrued expenses, amortization, depreciation, and loan interest. The accounting team will reconcile cash accounts and balance sheets.

Best Month-End Close Checklist Excel Template

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What is the purpose of month-end close process?

The month end close is an accounting procedure that finalizes and closes out all financial activity for a business for the preceding month. This timeframe represents a well-defined period for accounting purposes. The process involves reviewing, documenting, and reconciling all financial transactions for that period.

Businesses that wait till the end of the year to prepare their financial reports are likely to find it a tedious and daunting task. To ease the process, most businesses prepare financial statements in monthly reports to get an ongoing view of their financial KPIs and make the year-end process smoother. 

It is important to note that the month-end close is an official process to finalize the balance sheet numbers. So, in the future, it is unlikely that any changes will be needed to the data.

What are the steps in the accounting close process?

There are five steps to the month-end close process. These steps give a general overview of how most businesses review and reconcile their books at the end of every month:

  1. Collect all financial information
  2. Verify and reconcile the data
  3. Assess fixed assets
  4. Make financial statements
  5. Conduct a final review
Steps in the month end close process

1. Collect all financial information

The first step in the month-end closing process is to collect all the relevant financial information. It includes income statement items (e.g., accounts receivable), expense records (e.g., accounts payable), and other daily transactions.

2. Verify and reconcile the data

After collecting all the data, it needs to be cross-checked with receipts, bank statements, and other sources of information that the business might have.

All accounts on the balance sheet, like cash, savings, and checking, must be reconciled. It gives the business a clear idea of its cash flow.

Free Bank Reconciliation Template (Excel)

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3. Assess fixed assets

All fixed assets that a business might have, like equipment, technology, storage, housing, vehicles, etc., need to be assessed. It is also essential to consider that these assets depreciate, and the depreciation amount needs to be categorized under expenses.

4. Make financial statements

Now that you have all the information in place and have verified them, it’s time to prepare your financial statements. These include the balance sheet, income statement, and cash flow statement. Make sure the entries are recorded correctly and that there are no discrepancies between the financial statements. 

5. Conduct a final review

The month-end closing process is critical for every business. So, a final review is always done before the closing process is completed. This review is done by the top management or someone who wasn’t involved in the closing process to get a fresh view of all the data once again. It ensures that there aren’t any mistakes in the monthly financial statements.

What is a month-end close process flowchart?

Once we know what steps are involved in the month-end close process, an accounting professional would want to create a personalized flowchart as it may vary depending on the type of accounts and transactions in a company. However, here’s an ideal flowchart that can be followed for a month-end close process depending on the roles, deadlines, and processes. 

month-end closing process checklist

Why does month end close take time?

The accounting department often takes a lot of time to complete the month-end close process. But, business leaders want to streamline and make the process faster as the month-end close numbers act as a starting point for the plans for the upcoming months.

However, just because your peers are closing faster,  you shouldn’t rush your month-end close. A better approach would be to steadily optimize your month-end process in a way that keeps errors at bay while reducing the close time.

To speed up the month end close process, you can start by implementing a standardized monthly closing checklist, automating repetitive tasks, improving communication and collaboration among teams, and identifying and addressing bottlenecks in the process.

A month-end close servey

Source – A survey by Ventana Research

What are the best practices to improve the accounting month end close process?

The month-end closing process is a routine activity for every business. Before we talk about its best practices, it is essential to identify and mitigate the challenges involved in completing the month-end closing process accurately and quickly. Let’s look at some of the common roadblocks businesses face during the month-end close and their solutions.

Financial Close Bottlenecks

1. Lack of centralized repository of data

If the financial documents required for the month-closing process are stored in different locations, it will be cumbersome to access them quickly. So, a centralized repository is recommended to ensure the smooth collection of data.

2. Errors in spreadsheets and other manual records

If everyone has access to the reconciliation documents it will be difficult to keep the work error-free when changes are made in an unorganized manner. Having a system where only authorized employees are allowed to access the documents is essential. 

3. Insufficient knowledge about the closing process

The month-end closing process is complicated and might vary for every business. So, if the employees are not given adequate training, they may find it challenging to carry out the process efficiently. 

4. Status tracking

If multiple teams are involved in the monthly closing process, then keeping track of the status of tasks is going to be a significant pain point. HighRadius’ Autonomous Accounting Solution gives real-time visibility into the different financial tasks and ensures activities that involve multiple stakeholders don’t get slowed down.

Importance of a strategic financial close system

There is little doubt that month close is a significant activity in the finance function which requires the books to be closed quickly and accurately. Needless to say that forecasting cash flow predictions accurately, making strategic business decisions, and financial planning, all depend on a successful financial closure.

The month end close process is important to businesses and results in the following ways:


What are the best practices to improve the month-end closing process?

Your month end close process should include recording incoming cash, checking your AR records, and reconciling all accounts, including petty cash. Track all your business transactions, guarantee accurate records, and mitigate fraud risks to ensure financial well-being of your organization.

Here are some best practices to follow during the month-end closing process:

  1. Choose quality over speed
  2. Find areas of improvement
  3. Meet deadlines
  4. Automate required processes
Best practices to improve month end closing process

1. Choose quality over speed

Month-end closing is among the most critical accounting processes for every business. So, doing it in a hurry and making mistakes won’t help, especially if you plan to refer to these statements for your year-end close. Accurate monthly financial reports help you improve transparency and track KPIs correctly.

2. Find areas of improvement

Since month-end closing is a routine activity, every time you encounter a roadblock or problem, note it down and try to address it effectively. For example, if collecting data takes more time than planned, try to keep everything organized throughout the month. 

You could also look at investing in automation solutions that support data aggregation and segmentation. HighRadius’ Autonomous Accounting Solution provides financial close automation which offers project templates, close task management, and accounting anomaly detection.


3. Meet deadlines

Even though you must not sacrifice quality for speed, you must also plan ahead to meet your month-end financial reporting deadlines. If you are required to complete the closing process within a week, and you know that the timeline is unrealistic, then communicate it beforehand. 

Sticking to the same schedule for releasing financial statements every month can help you better organize your team’s time and activities. Adopting Autonomous Accounting Solutions like HighRadius’ can help you make day-zero financial close a reality through immediate and accurate decisions.

4. Automate required processes

Automation is the key to reducing the time and effort required for the month-end closing process. From collecting data to reconciling accounts, automation can speed up the workflows drastically. It also helps reduce errors and makes sharing of the financial statements easier.

What is a month-end closing process checklist?

A month-end closing checklist is a list of tasks that needs to be completed before closing the monthly financial books. It is crucial to have a checklist as you need to aggregate data from multiple places to create and review the financial statements. Here are some records that you need to check:

What is Month End Close? Steps, Checklist, and Best Practices
  1. Balance your cash account

    Ensure that your cash balance matches the bank statements, and check if there are any discrepancies or undeposited funds.

  2. Keep accurate expense record

    Record and cross-check the company’s expenses for the period accurately.

  3. Manage due payments

    Check the status of due payments and whether you have to write off any bad debt.

  4. Track supplier payments

    Cross-confirm the payments that you made to suppliers during the month.

  5. Monitor inventory and asset value

    Document the depreciation value of fixed assets and track your inventory.

  6. Review accumulated tax liabilities

    Check for the accumulated tax for the period concerned.

  7. Calculate employee compensation

    Calculate employee payroll for reimbursement.

  8. Manage bank loan payments

    Calculate the monthly interest costs payable to the bank and amortization of loans.

Best Month-End Close Checklist For 2023

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Top 5 advantages of using a financial close solution

An integrated, intelligent cloud financial close solution can optimize and enhance the capabilities of a basic ERP system. Here’s how:

  1. Day zero close

    Enable day-zero close by reducing time-consuming, last-minute manual tasks through automated workflows and pre-configured templates in the record-to-report process, which helps in:

    • Zero-day would make the picture ready without delays (zero-day)
    • Because it saves time from a lot of manual work that allows the financial team to focus on other critical financial processes like budgeting, forecasting, and analysis.
  2. Real-time visibility

    Offer analytics to gather real-time insights across large volumes of finance data by using Artificial Intelligence. This feature helps organizations track progress and identify bottlenecks. And helps to make more informed decisions.

    • Provides transparency into the financial close process;
    • It makes it easier for teams to collaborate and work together as most of the current status will be visible to everyone.
    • It helps to improve communication between teams.
  3. Improve accuracy

    Eliminate dependencies on disconnected spreadsheets with a secure, collaborative, cloud-based spreadsheet-style interface optimized for finance.

    • It provides an improved and clear picture of an organization’s financial health, which helps to make better decisions.
    • It helps in reducing the risk of errors and omissions in financial statements.
    • Better accuracy means greater transparency into a company’s financial activities.
    • Accurate and timely reporting can help build trust and confidence with investors and other stakeholders.

    Free Monthly Financial Reporting Template for CFOs

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  4. Increased efficiency

    Use advanced capabilities such as Artificial Intelligence (AI) for errors and anomaly detection, enabling timely action and avoiding the month end delays

    • This helps organizations meet deadlines and reduce stress for the finance team.
    • An efficient accounting close process helps to save money by reducing the need for overtime pay, additional staffing etc.
    • Efficiency can improve consistency and reduce the risk of errors.
    • Eventually it leads to increased employee satisfaction and retention.
  5. Streamlined collaboration

    Offers a single source of truth across the finance department and accelerates and improves decision-making for finance and accounting leaders.

    • Teams will work together to ensure that they follow established processes and that financial reports are accurate and complete.
    • This can prevent errors caused by data entry

How can HighRadius help in your month-end closing process with automation?

One of the main challenges in month-end closing is the amount of time it takes to complete the process. Most organizations take around 5-10 working days to complete the month-end close. And businesses often find it difficult to reduce this time. 

A survey shows that 40% of executives say internal levels of scrutiny are the root cause of delays in month-end close, while 35% say it’s the growing need to find and consolidate the data for financial statements.

HighRadius’ Autonomous Accounting can help your business make the month-end closing process faster, smoother, and error-free. Its AI-powered transaction detection system gives access to real-time data and helps spot errors. It also automates manual tasks like financial data collection and reconciliation.

Our autonomous solution also makes it possible for businesses to make their month-end closing process continuous, ensuring a zero-day financial close, and up to 40% reduction in monthly-end close time.


  1. What is the first step in the month end close process?

    The first step in the month end closing process is to collect all financial information like income statements, expense reports, and other transaction details.

  2. What are the month end close activities?

    The month end close activities include collecting information, reviewing them, preparing financial statements, and conducting a final review.

  3. How long does a month end close process take?

    The month end close process can take anywhere from 5-10 days. Using automation tools for accounting and month end close can help considerably bring down the time.

  4. What should your month end reports contain?

    A month end accounting close report typically includes a summary of financial statements, KPIs, variance analysis, cash flow analysis, inventory analysis,ar and ap aging reports, and other relevant information for the preceding month. The specific content of the report varies depending on the organization.

  5. What are month end reports?

    Month-end reporting is the process of preparing and analyzing financial reports at the end of each month to summarize a company’s financial performance. It includes reviewing financial statements, such as income statements, balance sheets, and cash flow statements, and identifying key performance indicators.

  6. What is accounting close?

    The accounting close process is a series of procedures undertaken at the end of an accounting period to finalize a company’s financial statements. It involves reconciling accounts, adjusting entries, and preparing financial statements to ensure accurate and complete financial reporting.

  7. Is month end close hard?

    Given the repetitive and manual nature of tasks, the accounting close process can be cumbersome as many accounting teams lack the systems and tools to handle these workflows smoothly.

  8. What is the month end close policy?

    It is the process of reviewing, reconciling, and verifying that all financial transactions and aspects of the company ledgers from the past fiscal year add up. This involves calculating the business expenses, income, revenue, assets, investments, equity, and more.

  9. What is year-end vs month end closing?

    The year-end closing process is the same as the month end close process, except that the system zeros out income and expense accounts.

Related Resources

Anomaly Management
Autonomous Accounting
Financial Close
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