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5 Steps To Streamline Your Month-End Close Procedure

You may already know this, but here it goes again.

“Running a business is hard”.

But what’s harder??

Even harder is making sure that your business is financially healthy at all times.

Running your month-end close process will allow you to view your financial process at the end of each month. These essential steps will allow you to obtain a quick overview of your business’s financial status on a month-by-month basis.

If you want to make sure sure that your business is financially healthy, this article is for you.

Let’s take a look into the process of Month-end close in this blog post.

Month-end close is a process that allows you to take a look at the financial status of your business over the previous month.

Public Companies have regulations and strict deadlines to maintain their month-end close processes. It is a compulsion for them to maintain it and produce reports whenever required.

But private companies are exempt from this type of pressure and can afford to not work on their month-end closes.

If you are someone who has no record of your business’s monetary status, you should ask yourself why you are not doing it.

List the reasons, why aren’t you taking a hold of your financial condition every month.

If you think, it is not important, you should read through the next subsection to understand the importance of the Month-end process.

A lot of business leaders take care of their business’s financial status with bank balances and online banking statements. This can work out well when the business is small and transactions are less and everything in your business is on a smooth track.

When the business grows it is important to put a formal process in place to review the financials every month.

A monthly review of your financials helps you to assess the state of your business and take action on important metrics such as revenue and costs in case you are short of plan.

You can also set up and review other important metrics such as customer-wise profitability on a monthly basis if you set up a monthly close process.

Uncertain times like the crisis and economic recession are where the financial statements act as a guiding light and help you in understanding trends in your business. It can help you cut out unwanted expenses and put additional pressure on generating more revenue (if needed).

You can also use them to identify where your money flows and how you can efficiently manage operational costs. So, if you don’t have a hold of your month-end close process, things might go downhill without notice.

So, What do you need before working on a month-end close process?

Your month-end process can be chaotic if you don’t have the right information in hand.

Let’s take a look at what you need before working on your month-end close processes.

  • The total amount of Revenue

  • Customer-wise revenue

  • Headcount of the Company

  • Raw material consumption (for manufacturing companies)

  • Timesheets by employees (for services companies)

  • Bank account information

  • Inventory levels

  • Petty cash and other funds


8 Essential Month-End Process Checklist.

But private companies are exempt from this type of pressure and can afford to not work on their month-end closes.

If you are someone who has no record of your business’s monetary status, you should ask yourself why you are not doing it.

List the reasons, why aren’t you taking a hold of your financial condition every month.

If you think, it is not important, you should read through the next subsection to understand the importance of the Month-end process.

A lot of business leaders take care of their business’s financial status with bank balances and online banking statements. This can work out well when the business is small and transactions are less and everything in your business is on a smooth track.

When the business grows it is important to put a formal process in place to review the financials every month.

A monthly review of your financials helps you to assess the state of your business and take action on important metrics such as revenue and costs in case you are short of plan.

You can also set up and review other important metrics such as customer-wise profitability on a monthly basis if you set up a monthly close process.

Uncertain times like the crisis and economic recession are where the financial statements act as a guiding light and help you in understanding trends in your business. It can help you cut out unwanted expenses and put additional pressure on generating more revenue (if needed).

You can also use them to identify where your money flows and how you can efficiently manage operational costs. So, if you don’t have a hold of your month-end close process, things might go downhill without notice.

So, What do you need before working on a month-end close process?

Your month-end process can be chaotic if you don’t have the right information in hand.

Let’s take a look at what you need before working on your month-end close processes.

  • The total amount of Revenue

  • Customer-wise revenue

  • Headcount of the Company

  • Raw material consumption (for manufacturing companies)

  • Timesheets by employees (for services companies)

  • Bank account information

  • Inventory levels

  • Petty cash and other funds

Once you have all the above components, the following five steps should be quite easy to follow.


1. Have a dedicated process with your sales team

Make sure that all the invoices are submitted to your accounts department from your sales. Whether billed or unbilled, your accounts department should have a hold of all invoices by the End of the month.

Create a process and a set of standard procedures to make this a seamless handover.


2. Create an individual reporting process for all teams

Make sure that all your teams share a list of their expenses. Create a generalized process sheet, where they can fill in all the expenses incurred during a month. They can use this sheet to fill up everything from vendor invoices to other expenses.

They can also mark if the invoice has been processed or if it is yet to be worked upon.


3. Collect all the information and compare it

Once you create individual processes for every single team, you need to get their outputs and collate them together. Understand which departments are underspending or overspending their budgets.

You can compare it with the budget to check the completeness of the data.

4. Create a list of accruals

The best thing you can do to streamline your month-end close process is the creation of accruals. Create a list of accruals and see if they’re on the sales side or revenue side.

With this list, you can create accurate expense schedules for your organization. When your expense schedules are highly accurate, the month-end close process becomes a breeze.

5. Use an ERP/ accounting software

Above all others, your best bet would be to reduce manual intervention with accounting. Always use an ERP/ Accounting software to track all your expenses and revenues. Once you start implementing automation into your business, you can reduce a ton of errors and speed up the process.

By using the financial health checklist above on a monthly basis, you can gain a good idea of how you are doing financially at any time during the financial year. Our CFOs are available to discuss your challenges in streamlining your month-close process.


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