7 Best Practices for a Quicker and More Accurate Month-End Close

Blog post

Any organization should be able to produce accurate and timely financial statements in a reasonable amount of time after the month’s end. Financial statements are crucial to management so that leaders can understand the financial health of the organization as well as make short- and long-term operational and strategic decisions in a timely manner.

Why Is the Month-End Close Process Important?

The month-end close process enables you to account for all business transactions conducted during the previous month. This is a vital part of ensuring the accuracy of your accounting data. Reconciling all business accounts on a monthly basis pays short- and long-term dividends. Among other things, it enables company leaders to determine if the business is on track to meet growth projections, helps formulate accurate budgets going forward, and greatly simplifies and speeds up the year-end close process.

In short, the benefits of performing the month-end close are:

  • Maintaining accurate financial records
  • Being able to make informed decisions
  • Simplifying and streamlining the audit process
  • Saving time each year on tax preparations and filing
  • Shining a light on areas of the business that are under-performing

7 Month-End Close Best Practices

Time Management

Having a well-organized plan that aligns people, processes, and technology is paramount. Regularly communicating the plan, as well as expectations and deliverables, with your team members makes it easier to resist external pressures and stay on track towards achieving daily goals. Utilizing a task manager tool can provide better control and visibility over task statuses and workflows, allowing for more effective management of resources and reduced risk. Ultimately, this can lead to a more efficient and effective approach to meeting month-end deadlines.

Stay Organized

An important tool in increasing the efficiency of this process is a month-end close checklist. In addition to helping you stay organized, it will also help you identify problems and understand where obstacles occur, as well as which tasks impede a speedy and efficient month-end close.

Adopt a Risk-Based Approach

Software built to manage the month-end close can save significant time. However, it is critical that organizations maintain control and accuracy of month-end processes while reducing their team’s overall workload. With an automated risk-based approach, teams can focus their efforts on high-risk items while lower-risk items can be done less frequently.

An important part of corporate governance is defining internal controls to protect an organization and to ensure the orderly, efficient, and accurate conduct of business. To this end, it is vital that you document your steps to create a clear audit trail. Risks should be identified, analyzed, and rated based on the organization’s risk assessment protocol.

Enhance Collaboration

In the pre-close meeting, discuss the close schedule and timeline, possible issues in the upcoming close, and follow-ups from the previous month-end close.

It is crucial that you also conduct a post-close review to ensure time was well spent. In the post-close meeting, review what worked well and discuss possible solutions for what did not. Review data that was gathered throughout the process, including time-consuming steps, risks, controls, and irregularities from previous months and use what you learn to improve closing practices.

Invest in Training and Development

It is essential to the long-term success of any business that the accounting team be able to perform an accurate and efficient month-end close. For that to happen, there should be continuous training and development of team members to ensure everyone involved has a comprehensive understanding of the latest software, regulatory changes, and emerging business trends. By investing in training and development, you ensure your team always produces the best, most accurate financial statements.

Make Productive Use of the Latest Technology

The days are long gone when managers and members of the accounting team would manually review the books every month. And for good reason. Manually searching for errors and oversights takes a significant amount of time, and even so, a manual review may overlook errors. Month-end close best practices are easily achievable by embracing the latest technology to reduce both the amount of time it takes to close and to reduce the number of errors that could come back to haunt you.

Review the Financial Statements

It is important that you review the financial statements generated in the wake of the month-end close. Doing so will enable you to identify irregularities and underperforming departments or initiatives as well as shine a light on trends you might not have otherwise noticed. In spite of your investment in training and technology, there is still the possibility of errors—consider a review of the financial statements as a last opportunity to identify and rectify any such errors.

Key Takeaways

The month-end close process is a vital step in ensuring company leaders are always working with the latest and most accurate financial information. Having reliable financial information will reveal whether the company is on track to meet its growth projections while also enabling more accurate budgeting going forward. Here are the key takeaways from our examination of the month-end close process:

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Trintech can help implement all 7 of these best practices into your organization’s month-end close, with solutions that can streamline and simplify your processes. Explore how automation can help solve your month-end woes.