As long as an experienced financial professional or manager takes responsibility for month-end closing, this alternative can work for your business. Also, review journal entries to determine whether you have taken materiality (significance) into account. If possible, increase the dollar limit for certain transactions to avoid pointless recording. These workarounds increase the likelihood of errors in your financial data, which can cause problems in the future and take hours to document a reproducible procedure each month. Even after entering data into the system, your accounting team still needs to ensure the information is accurate across all platforms.

That means verifying that you’ve sent invoices and cross-checking which invoices clients have paid. Furthermore, review your general ledger to ensure you’ve posted credit and debit entries correctly. Accurate reporting allows top management to identify and correct performance problems. In addition, creditors, investors and analysts can assess bookkeeping for startups the company’s overall performance and financial condition. That’s why we emphasize a solid flow in closing each month, from when the team begins gathering information to crossing the finish line with the final financial report. Those numbers are a bit faster than APQC found in 2018, where the median close of 2,300 organizations was 6.4 days.

Integrate your systems and centralize data

A checklist will help you keep track of essential information and minimize time-consuming errors and redundancies. Remember, your specific procedures may vary based on your industry, accounting methods, available technology, etc. If you’re using a cloud-based, automated solution such as Planergy, many of these data sources will already be connected, organized, and ready for real-time access, manipulation, and analysis as needed.

• The biggest hurdle that most companies face starts at the data collection phase.
• For some, it could take weeks to manually locate all necessary data and spend time transforming it within spreadsheets across computers.
• Next, review if you’ve invoiced all your customers accurately and send any missing invoices.
• As such, it’s a good idea to ask somebody who didn’t prepare your accounts to take a look at them.
• Review the fixed asset register to ensure that all assets have been recorded.
• The month-end closing process is critical to any business but can be very time-consuming.

Furthermore, manual performance of redundant, potentially automatable tasks decreases the productivity of the company and low productivity can cost employers around USD 1.8 billion dollars annually. Any accounting close activity cannot be expedited because of the possibility of errors, which are unacceptable in the accounting field. The above survey also found that 85% of participants reported having to re-open the books in at least one month during the past year to fix errors.

Need help with accounting? Easy peasy.

Cflow is a cloud-based workflow automation software tool that helps you manage month-end close processes. That helps you automate the month-end process through intelligent bookkeeping. The platform helps you generate reports, reconcile accounts, and pay bills https://www.apzomedia.com/bookkeeping-startups-perfect-way-boost-financial-planning/ with minimal effort from your end. You should make sure that every transaction has been accounted for in the journal entries (including debit and credit transactions). If so, these will need to be added before proceeding with the month-end closing procedures.

While there’s a certain level of predictability in expenses and transactional activity, each month may come with new wrinkles to account for. Keeping the general ledger continuously up-to-date allows your team to do a “soft close” on any day of the month to get a snapshot of the company’s current financial health. This method also reduces the accounting team’s workload during the “hard close” at the end of the month.

Month-End Close Process

This can be a monotonous task to undertake every month but ignoring it can lead to problems later on. Companies that don’t close their books each month often scramble toward end of the year to find information they need for reporting. Oversights can occur, mistakes can be made, and annual reports can be delayed or flawed. The more times you go through the month-end close process, the better you’ll understand what steps to take and how to work more efficiently in the future. Doing so reduces your reliance on last-minute records from external accounting.