5 Month-End Close Best Practices
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 they can understand the financial health of the organization and make short-term and long-term operation and strategic decisions in a timely manner.
An important tool in increasing the efficiency of this procedure 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.
Top 5 Month-End Close Best Practices:
1. Manage Your Time Well
According to Prophix’s 2023 Finance Leaders Report, 63% of respondents noted that having a plan to align people, processes, and technology was a substantial obstacle. Aligning people, process, and technology can optimize resource utilization and improve workflow management. By having a well-organized plan and regularly communicating expectations and deliverables with team members, it’s 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 reducing risk. Ultimately, this can lead to a more efficient and effective approach to meeting month-end deadlines.
2. Take a Risk-Based Approach
Software built for a financial 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.
3. Standardize Processes
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.
4. Learn from your mistakes
Accounting takes time—every month, you will learn “hacks” that will help you become more efficient in the next month’s close. It takes time to know the ins and outs of a certain software, so give yourself time to become a master; your comprehension will improve the more and more you use it. Don’t be afraid to ask questions and take advantage of any training programs that may be offered by your company or external accounting organizations in your area.
5. 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’s close.
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.