What is the end of the month? Steps, process, checklist and best practices - Vena (2023)

What does your month end mean?financial closeprocess looks like? Do you have a system, or do you "wing it" and hoping for the best? Looking for a better way to get things done over the next month?

Never underestimate the importance of the month-end close and the importance of a month-end close checklist. Keeping track of what happened the previous month can position your business for future success.

Monthly closing ensures you have information about the financial health of your business and are ready to report those numbers. It's critical when making short-term decisions and helps your teams work toward your organization's long-term goals.

In addition, accurate monthly reportsmakes the year-end closing much easierunderstand.

The month-end close process is vital for any business, but it can be very time-consuming. Creating the right month-end close checklist allows your team to break down reporting silos and focus on more strategic business areas.

💡Main conclusions:

  • Your month-end closing process should include registering incoming cash, reviewing your AR records, and reconciling all accounts, including petty cash.
  • Track all your business transactions, keep accurate records and reduce the risk of fraud. Stay informed about the financial health of your organization.
  • Your month-end checklist should include categories, task descriptions, task prioritization, names of preparers and auditors, and provide a thorough review of the financial statements.
  • The benefits of a month-end checklist are fewer errors, better reporting results, increased efficiency, and preparing your organization for audit readiness.
  • Common mistakes companies make during month-end close are duplicate data entry, non-standard processes, information delays, and a lack of automation.

How does the monthly closing work?

At the end of the month, your finance and accounting teams collect, review, and reconcile the previous month's financial transactions and activities.

It provides compliance and financial accuracy while maintaining the integrity of your data forAnalysis planning. Spending and business activity are somewhat predictable, but each month can present new issues for you and your teams to consider.

For this reason, we emphasize a solid flow at the end of each month, from the start of the team's intelligence gathering to crossing the finish line with the final financial report.

This month-end checklist not only outlines the transactions but also the growth of the business in each period. Remember that every basic task has many sub-steps. In addition, deadlines depend on the specific situation of your company.

This process includes multiple steps that your team will complete over the course of several days.

What are the key steps in the month-end closing process?

1. Preparatory work

Provision of email on unpaid invoices. Contact your sales rep to ensure no lost revenue and sales pipeline metrics are correct.Make sure all manual entries are correct(But don't bother checking the automatic posts at this early stage.)

2. Match the money

Check and reconcile money. When money is on the way, look at its destination and relationships. We recommend reviewing all payment accounts to ensure everything is organized (including petty cash) and grouped correctly.
Check account transactions: Double check and adjust accounts payable (AP) and accounts receivable (AR).

3. Accumulation Estimates

Review all end-of-month regulations and track coverage for the next month. Accounts for prepayments such as earnings.

(Video) Vena Solutions - Financial Close in 6 Minutes

4. Preliminary Revisions and ASC 606

Review all manual and automated data streams related to revenue recognition and commissions. Test validity and conduct preliminary walkthroughs with your team to ensure information makes sense and is consistent across reports.

5. Carry out flow analysis and adjust

We refer to this as “making your finances more flexible”. Review and review the month-end monthly and quarterly results to see how the report compares to the company's growth goals and expectations. If something feels unusual and needs adjustment, it can grow over the years. ‍

6. Pack and deliver

Treat these reports as if they are already due for release. Double-check your reports, then hand them off to executive teams for review and analysis.

Why is the monthly statement important?

Monthly Close enables your teams to keep track of all your monthly business transactions. It is important to ensure that your accounting information is as accurate and complete as possible.

Accurate monthly data feeds into many other accounting processes. For example, an accurate monthly report makes it much easier to close the year.

Month-end closing benefits include:

  • Prepare accurate and up-to-date financial records.
  • Organize financial statements and save time filling out tax returns.
  • Month-end reports streamline the process and make auditing easier.
  • The financial close process identifies areas that need improvement.

You can also make more informed decisions based on your company's financial activities. He is positioning his leadership team to do thismoney allocationsfrom which all departments of the company benefit.

The ultimate checklist at the end of the month:

1. Register the money received

The money received comes in various forms such as bill payments, prescriptions and loans. Make a note of any funds your business received during the month. This is also a good time to do the following:

  • Check pending deposits
  • Make sure all invoices have been sent
  • Count money in hand

Manually recording cash received and completing these other steps can be time consuming and stressful. It's better to use oneSoftware application that automates these tasks. This makes the monthly closing more efficient and accurate.

2. Check accounts payable

Depending on the size of your business and the number of monthly transactions, you may find it difficult, if not impossible, to capture transactions as they come to you. But that's no excuse for mistakes. You still need a system for organizing and keeping accurate records.

An accounts payable review should include, but is not always limited to:

  • Gathering all necessary records
  • Determine if there are any liabilities that have been paid
  • Review your accounts payable records to see what has been resolved and what has not

It's easy to postpone this step until the end of the month, but it's also a costly mistake. Automation software can help you better track your liabilities throughout the month, so you can take less pressure when your tax calendar changes.

3. Reconcile accounts

Don't fall into the trap of assuming you (or someone else) didn't make any mistakes during the month. Even the most experienced and knowledgeable financial professionals make mistakes from time to time. That's why it's so important to reconcile all of your accounts.

In short, this is the process of matching your records to bank statements such as your financial institution. If the numbers match, you're in good shape. But if they don't, you have work to do. It's time to dig deeper to identify the reason for the difference, you can use thisBank reconciliation templatehelp.

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Go through the process by classifying all of your accounts into one of these three categories:

  • Bank accounts (checking and savings accounts)
  • Bank loan or lease (e.g. for equipment or real estate)
  • Accumulated or prepaid invoices

It's usually best to start with bank accounts, but it's more important to implement a reconciliation system that works for you.

Note: If you don't reconcile the accounts, a simple mistake this month can become a bigger problem the next month.

4. Check fixed assets

Introduceactive permanentlyas added value for your company. Examples are work vehicles, office equipment and real estate (buildings and vacant lots). Intangible assets, including trademarks, patents, domain names and brand names, also fall into this category.

Tangible assets are long-term items that are not easily converted into cash. Instead, many of these assets incur monthly costs in the form of depreciation, repairs, or amortization. For example, machines – for manufacturing products, for example – are crucial to the success of your company. It's valuable too. However, over time, you can expect these machines to depreciate in value.

Record all expenses related to fixed assets during the month-end closing.

5. Review all financial reports

This may be the last thing you do, but it still requires your attention. Start by reviewing these financial statements:

  • General Constability
  • result report
  • balance sheet
  • proof of income
  • cash flow statement

A full review will leave you feeling confident at the end of the month. It also prepares you for success in the coming month.

If you find errors or problem areas such as For example, overspending in a particular department, address it immediately.

4 benefits of a month-end checklist

Understanding why month-end close processes are critical to the business is the first step in creating a checklist. Before we discuss the most common mistakes people make when trying to close the month, let's look at the benefits of a month-end close checklist.

1. Reduces accounting errors

Accounting reports contain a large amount of data and are prone to double-entry, omissions, and other errors. These errors can be legitimate oran attempt to cover up fraud or theft. A month-end checklist helps accountants remember what to skip.

2. Improves accurate report results

Accurate reporting allows senior management to identify and troubleshoot performance issues. In addition, creditors, investors and analysts can assess the company's overall performance and financial condition.

By implementing the checklist, the accounting department can produce accurate financial statements that all interested parties can trust. A checklist at the end of the monthhelps eliminate errors and omissionsand helps ensure critical balances like cash and inventory are accurate each month.

3. Increases the efficiency of your teams

Generating reports takes a long time due to large amounts of data. However, delays in the release of financial statements can cause management to become aware of significant performance and liquidity issues that need to be resolved sooner.

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Month-end checklists reduce the time spent organizing and submitting internal financial reports. A well-designed to-do list keeps accountants and management on the same page when it comes to getting financial reports.

4. Prepare your company for an audit

In addition to the audit readiness of your company at the end of the month, a checklist will also help you with the preparation of your annual financial statements. Implementing a month-end checklist increases efficiency and accuracy, and reduces the time, effort, and expense of preparing for year-end audits.

Common month-end closing mistakes - and how to avoid them

1. Duplicate data entry

One of the challenges we face when completing month-end closing tasks is that entering data manually is time-consuming. While you may have multiple systems to help you run your business, they tend to run independently.

Employees must manually upload data to the accounting system for theAccounting to process end-of-month goals. Unfortunately, this process is time-consuming and error-prone, so finding an automated solution is imperative.

Even after entering the data into the system, your accounting team still needs to ensure that the information is correct across all platforms. Ultimately, this manual process exhausts resources.

When teams manually enter data into the system, there is a high risk of error. Finding a system that can automatically transfer data from one system to another is a great way to streamline the month-end close process. Even small mistakes in the annual financial statements can lead to big problems when the information flows into the planning.

Even if there is an error in the data, using the manual process will take a lot of time and effort to find and fix the cause. This required time delays the release of the monthly financial statements as your accounting team has to spend time reviewing completed work.

2. Non-standard processes

A month-end close process should generally involve the same steps each month. However, the manual integration of data from different departments can present new challenges every time. Standardizing processes guarantees accurate and consistent results month after month.

Standardized processes help you meet your month-end close goals, even if your accounting team is understaffed. On the other hand without asystematic way of balancing accountsyou can encourage employees to look for shortcuts to their tasks.

These workarounds increase the likelihood of errors in your financial data, which can lead to problems later and take hours to document a repeatable procedure each month. Create checklists of tasks and activities sorted by date.

Simplify your chart of accounts. Also check the journal entries to see if you have considered materiality (materiality). If possible, increase the dollar limit on specific transactions to avoid unnecessary writes.

3. Past Due Financial Data

Another challenge you may face is the speed of generating monthly financial reports. In other words, how much time does your accounting department need to prepare the statements after the end of the month?

If the process is taking too long, you need a way to improve the efficiency of the month-end closing process. Not having access to information when you need it makes it difficult to make decisions and plan for the future.

Running a business without readily available financial statements is challenging. Without the right tools, your company's processes become less effective and you lose track.

Find out why data from a specific source is often delayed. Other departments and providers may not understand the need for timely information.

Employees may need specific types of training or refresher training. Another option is to reconcile important accounts more frequently. This reduces your dependency on last-minute external accounting documentation.

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4. Understaffed accounting teams

While you may not have the resources to hire more staff, training a few employees on the critical steps in the closing process could be a viable option. As long as an experienced financial professional or manager takes responsibility for the month-end closing, this alternative can work for your business.

You must also assess fraud concerns. Cross-training of employees can also allow for segregation of duties and improve a company's internal control environment.

5. Lack of automation

Automation is important in today's business world. Don't rely on spreadsheets and manual processes that don't allow for timely reviews and corrections in your accounting system. Identify tech-savvy employees who can research executive needs andcurrent software reporting capabilities. Get advice from a cloud consultant or coach on your current processes and the potential for incremental automation.

Is that all you have to do?

The steps in our guide to the best month-end close are a good start for any month-end process checklist, but more steps can be added. Consider the following:

  • Check the income and expense accounts
  • count stock
  • Check the little box

The more times you go through the month-end closing process, the better you understand what steps to take and how you can work more efficiently in the future.


Are you confident that you can master these five steps? Do you think they will improve your month-end closing process?

Once you have created a month-end closing checklist in Excel, you can use oursFinancial Close Management Softwareto automate tasks to save time, reduce stress and maintain accuracy.

Don't ignore month-end closing best practices anymore. A few simple steps can have a profound and positive impact on your business.

What is the end of the month? Steps, process, checklist and best practices - Vena (1)

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Vena automates time-consuming financial close processes such as data entry, account reconciliation, and intercompany transactions.

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What is the end of the month? Steps, process, checklist and best practices - Vena (2)


What is a month close checklist? ›

Reviewing bank accounts and statements. Preparing key financial statements. Profit & loss statement summarizing earnings and spend. Balance sheet detailing all assets and liabilities. Cash flow statement recording cash balance and all transactions.

What are the steps in the financial close process? ›

What Are the Steps to Financial Close?
  1. Identify transactions and record them in a journal.
  2. Post to the general ledger.
  3. Prepare an unadjusted trial balance.
  4. Reconcile debits and credits.
  5. Create adjusting journal entries.
  6. Run an adjusted trial balance and financial statements.
  7. Close the books and generate financial reports.

What is a close checklist? ›

A list of things to be done and items to be delivered before a transaction can be closed. Responsibility for each item is typically allocated among the parties on the checklist.

What are month-end procedures? ›

The month-end close is the collection of financial accounting information, review, and reconciliation of records each month. This is a fiscal reporting requirement for some companies, and helps businesses keep accurate records throughout the year.

What are the 4 closing entries? ›

What are the 4 closing entries? There are four closing entries; closing revenues to income summary, closing expenses to income summary, closing income summary to retained earnings, and close dividends to retained earnings.

What reports to run at month end? ›

The month end report should include the financial statements. But they should also include operational data, metrics, and dashboards that are both usable and meaningful. Remember, whatever data is provided should be used to make decisions.

What is the importance of monthly checklist? ›

A month-end close checklist is critical to ensuring a smooth and successful close process. Its purpose is to provide visibility into the status of each task, manage resources or deadlines, and reduce confusion as turnover happens or roles and responsibilities change.

What is end to end finance processes? ›

End-to-end describes a process that takes a system or service from beginning to end and delivers a complete functional solution, usually without needing to obtain anything from a third party.

What is the final step in preparing a financial plan? ›

Financial Planning Process
  • 1) Identify your Financial Situation. ...
  • 2) Determine Financial Goals. ...
  • 3) Identify Alternatives for Investment. ...
  • 4) Evaluate Alternatives. ...
  • 5) Put Together a Financial Plan and Implement. ...
  • 6) Review, Re-evaluate and Monitor The Plan.

What is financial closing reporting process? ›

The financial close process is a recurring system in which an accounting team verifies and adjusts account balances at the end of a designated period and before the accounting cycle closes. It starts with documenting the journal entry for each transaction and ends with preparing data for the next period.

What is end phase checklist? ›

What: A checklist of activities and deliverables that should be completed by the end of the Concept Phase. This checklist can be used during an end-of-phase management review. This is one of a series of end-of-phase checklists, one for each of our representative project phases.

What is a good checklist? ›

Gawande says a good checklist is precise, efficient, and easy to use even in the most difficult situations. It should provide reminders of only the most important steps, rather than trying to spell out everything—after all, a checklist can't do your job for you. And above all, a checklist should be practical.

How do you reconcile month end? ›

How to Reconcile Accounts for Month End?
  1. Record Incoming Cash. Record the funds you've received during the month in terms of loans, revenue, invoice payments, etc. ...
  2. Review Accounts Payable. ...
  3. Reconcile Accounts. ...
  4. Reconcile Petty Cash. ...
  5. Review Fixed Assets and Inventory. ...
  6. Assemble Financial Statements. ...
  7. Final Review.
May 13, 2021

What is EOM end of month? ›

Meaning of EOM in English

abbreviation for end-of-month dating: used to show that a bill must be paid 30 days after the last day of the month that follows. For example, a bill with an EOM date of 26 April must be paid by 30 June.

What is month end activities in accounts payable? ›

To put it simply, the month-end close is an important point in the monthly accounting cycle where all transactions are accounted for, business balances are adjusted and finalized (or the books “closed”), and then reports are created that reflect how the business performed during that month.

What is closing entry examples? ›

Below are examples of closing entries that zero the temporary accounts in the income statement and transfer the balances to the permanent retained earnings account.
This is done using the income summary account.
  • Close Revenue Accounts. ...
  • Close Expense Accounts. ...
  • Close Income Summary. ...
  • Close Dividends.
Nov 28, 2022

What is a closing entry give two examples? ›

For example, a closing entry is to transfer all revenue and expense account totals at the end of an accounting period to an income summary account, which effectively results in the net income or loss for the period being the account balance in the income summary account; then, you shift the balance in the income ...

What makes a good monthly report? ›

A good report contains all information your management team needs to make decisions. To make this easier for them, be sure to include a high-level overview of your organization or department scorecard. The information in this scorecard should be organized in the order that it will be read.

What should HR report on monthly? ›

c) Monthly HR Report Metrics Examples

HR costs per FTE: the HR cost for each FTE on a monthly basis. HR headcount ratio: the number of staff per individual HR staff person. Total HR costs as a percentage of overall labor costs: the total cost of HR as a percentage of total labor costs on a monthly basis.

What is the purpose of process checklist? ›

A process checklist is a process that include a step-by-step mandatory method application. These processes are usually paper sheets, books, or memorised lists that workers must validate while executing their operations.

What is checklist method? ›

Under the checklist method, a checklist is forwarded to the rater regarding the performance and behavior of the employees. The rater on analyzing the question and the employees rate the employees. Such questions carry a score that is given by the HR manager.

What is the end process? ›

The End Process activity ends processes that are running on the runbook server or on a remote computer. The End Process activity can be used to shut down an application that isn't responding. The activity returns success if the named process is successfully ended or if the name process isn't running.

What is end to end process management example? ›

Examples of end-to-end processes include procure-to-pay and order-to-cash, which cross a number of functional areas. In practical application, managing end-to-end processes and enabling global ownership is hard to do.

What are the 7 stages of financial life cycle? ›

The stages of financial freedom are dependence, solvency, stability, security, independence, freedom and abundance and can each be characterised quite clearly.

What is the fifth and final step in the financial planning process? ›

Step 5 – Implementation and review of the financial plan

A new pension or investment strategy.

What are the 7 areas of financial planning? ›

7 Areas Typically Covered in a Financial Plan
  • Financial statement preparation and analysis.
  • Insurance planning and risk management.
  • Employee benefits planning.
  • Investment planning.
  • Income tax planning.
  • Retirement planning.
  • Estate planning.

How do you prepare the end of period financial report? ›

How to Prepare Financial Statements
  1. Step 1: Verify Receipt of Supplier Invoices. ...
  2. Step 2: Verify Issuance of Customer Invoices. ...
  3. Step 3: Accrue Unpaid Wages. ...
  4. Step 4: Calculate Depreciation. ...
  5. Step 5: Value Inventory. ...
  6. Step 6: Reconcile Bank Accounts. ...
  7. Step 7: Post Account Balances. ...
  8. Step 8: Review Accounts.
Jan 16, 2023

What are the 7 steps to closing a project? ›

The 7-step project closure checklist
  • Formal hand-off.
  • Closeout all contracts and documents.
  • Review lessons learned.
  • Measure client satisfaction.
  • Prepare the project closure report.
  • Get sign-offs from stakeholders.
  • Archive the project.
Nov 15, 2021

What are included in the project closure checklist? ›

Make sure everything has been met 100%. Secure approvals and signatures. Ensure full stakeholder approval or customer satisfaction about your work by getting them to sign off on relevant deliverables. Close all outstanding contracts and agreements with internal partners or third-party vendors.

What I can do best practice checklist? ›

Checklist best practices
  • Step 1: Look at the mistakes made in the past. ...
  • Step 2: Seek additional input from others. ...
  • Step 3: Keep your focus on the small but key tasks that are often overlooked. ...
  • Step 4: Create simple “Do” steps. ...
  • Step 5: To communicate or not communicate. ...
  • Step 6: Assign the steps. ...
  • Step 7: Test the checklist.

What is a basic checklist? ›

A simple checklist template is any kind of process or list of tasks arranged in the form of a checklist; in other words, it's a to-do list where the order of tasks is usually important.

What are the six steps of the basic checklist? ›

6 Steps to Creating a Checklist
  • Step 1: Identify “Stupid Mistakes” That Cause Failure. ...
  • Step 2: Seek Additional Input From Others. ...
  • Step 3: Create Simple “Do” Steps. ...
  • Step 4: Create Simple “Talk” Steps. ...
  • Step 5: Test The Checklist. ...
  • Step 6: Refine the Checklist.
Mar 13, 2017

What is sample checklist? ›

The sampling checklist is a contract specific report showing material samples and tests required to satisfy Sampling and testing requirements. There are certain selections that need to be made correctly on a sample record that must exactly match what is shown in the sampling checklist.

What is a daily checklist? ›

A daily checklist is a simple task list. It gives you a list of to-do items that need to get done on a given day. A task list can be for work or home. Also, it can be for an individual or a team.

What are the two types of checklists? ›

There are two types of checklist. There is read-do checklists, read it and do it, and there is the do-confirm checklist. This is what the experts in your business, this is what we should all be doing.

What are the five steps of the closing process? ›

The Five Steps of Closing: A Homebuyer's Guide
  • Starting the Process. ...
  • Title Search and Examination. ...
  • Document Preparation/Request to Produce. ...
  • Settlement/Closing the Transaction. ...
  • Post-Closing.

What are the stages in closing a sale? ›

Closing sales in 7 steps (or less)
  • Send through the costs. ...
  • Ask for the sale. ...
  • Address your prospect's concerns. ...
  • Prepare to negotiate. ...
  • Use the right sales closing technique. ...
  • Follow up with your prospect. ...
  • Know when to move on.

What is the order of closing accounts? ›

The four closing entries are, generally speaking, revenue accounts to income summary, expense accounts to income summary, income summary to retained earnings, and dividend accounts to retained earnings.

What are the 5 closing entries? ›

A closing entry is a journal entry that is made at the end of an accounting period to transfer balances from a temporary account to a permanent account.
This is done using the income summary account.
  • Close Revenue Accounts. ...
  • Close Expense Accounts. ...
  • Close Income Summary. ...
  • Close Dividends.
Nov 28, 2022


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