10-Step Month-End Close Checklist & Best Practices

Struggling with the chaos of month-end close? You're not alone. Many finance leaders contend with reconciling accounts, validating data, and meeting tight deadlines, often resulting in errors, and working long hours.

But did you know that by 2027, half of midsize and larger companies will use close management software to speed up the financial close process and achieve greater control? This is because close management software will allow finance teams to automate their month-end close, but also overcome common challenges to make the process more streamlined for everyone.

To help you make the process more manageable today, we’ve created a 10-step checklist for finance and accounting teams—so you can ensure you don’t miss anything when closing the month’s finances.

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Understand and optimize the month-end close for success

Month-end close is part of a larger process called financial close that happens at the end of each month. During the process of closing the books, the finance team goes through all transactions from the last 30-31 days to understand how much was spent, how much revenue was generated, and how close the organization is to hitting its financial targets. Month-end close is only one type of close – organizations also close their books at year-end.

Month-end close is an important exercise for finance teams looking to understand how the past month’s activities impact profits, payments, and plans. Month-end close can help companies ensure they have accurate account statements by identifying unexpected and inaccurate transactions, which can also have a positive impact on your bottom line.

Month-end close can also speed up other processes like account balances and expense reports, by compiling the data necessary to run these reports later. Similarly, month-end close can streamline audits by establishing a consistent and accurate monthly record of reviewed transactions.

Note: This article uses close management software and financial performance platform interchangeably. Learn more about financial performance platforms.

Prophix has helped many finance teams get a clear picture of their month-end close process, gather data, and comply with regulations using Prophix One, a Financial Performance Platform.

Take Prophix customer Jamul Indian Village Development Corporation (JIVDC) as an example. With Prophix One, JIVDC was able to increase the accuracy and shorten the duration of their month-end close, gaining insights into their numbers 30% faster, which made it easier to maintain and produce monthly financial reports in 10 minutes or less.

With or without a financial performance platform, there are still steps you can take to stay on top of your obligations. That’s why we’ve created a 10-step month-end close checklist, so finance and accounting teams can drive success, even in the face of common close challenges.

10-Step Month-End Close Checklist for Accurate Results

Are you ready to streamline your month-end close? This step-by-step checklist will ensure a seamless financial close month after month.

Month-end close best practices

Month-end close is crucial for providing an accurate picture of your organization’s financial status on a recurring basis. Implementing these best practices can help reduce the time and resources required, while enhancing the quality of your financial reports.

1. Conduct pre- and post-month-end close meetings

Effective communication is crucial when executing your month-end close with a team.

• Pre-close meeting: Schedule this a few days or a week before starting the close process. Review everyone's responsibilities, walk through each step, and address any issues from the previous month.
• Post-close meeting: Use this session to review any problems encountered and highlight what went well. This continuous feedback loop helps refine the process over time.

2. Build relationships across the organization

Collaboration with budget owners and account holders is vital. Accounting and finance teams working in isolation risk missing critical details that affect accuracy.

• Data sharing: Strong relationships ensure all necessary data flows seamlessly to your finance team.
• Early warnings: Being informed about significant purchases or revenue changes in advance allows your team to prepare and manage these factors proactively.

3. Stay organized and efficient

Efficiency in other financial processes directly impacts the ease of your month-end close.

• Address inefficiencies: Improve processes in areas such as account receivables, budget approvals, and accounting software.
• Maintain organization: Keep the accounting and finance teams organized throughout the month. Identify and remove productivity obstacles to streamline workflows.

4. Leverage accounting automation

Automating parts of your month-end close can significantly reduce manual labor and errors.

• Reduce manual work: The right automation tools can save hours or even days, making the close process quicker and more secure.
• Enhance accuracy: Automation minimizes human error, ensuring a smoother month-end close.
  

6 common month-end close mistakes - and how to avoid them

Prophix One makes it easy for finance leaders to dodge common month-end close mistakes. With this powerful platform:

• KPJ Healthcare reduced the number of people involved in closing group accounts from four people to one person.
• Mission Health’s accounting team can close their books 15% faster.
• Umicore Group improved their audit trail with a direct link between their intercompany processes and financial consolidation.

To help you overcome similar challenges, we’ve outlined the 6 most common month-end close mistakes, and how to address them below.

1. Demonstrações financeiras irrelevantes

Challenge: Relevant financial statements are crucial for informed decision-making and maintaining organizational health. Delays in producing these statements can hinder strategic planning and lead to missed opportunities.

Opportunity: Implementing an automated reporting solution, like Prophix One, and establishing clear communication can ensure financial statements are timely, supporting strategic decision-making.

2. Human error

Challenge: Human errors can significantly compromise financial accuracy, leading to discrepancies that require additional time and resources to correct. This not only delays your financial close but can also undermine stakeholder confidence.

Opportunity: To address human error, you can incorporate a month-end close checklist (like the one in this blog!) and conduct peer reviews to minimize inconsistencies, improving your financial accuracy and stakeholder confidence.

3. Data quality

Challenge: Inconsistent financial data can slow down the financial close process and lead to mistakes. Ensuring your data is accurate and up-to-date helps keep things running smoothly and correctly.

Opportunity: Establishing a robust data validation process, conducting regular data audits, and utilizing data management tools, like a financial performance platform, can significantly enhance data accuracy and consistency.

4. Sistemas incompatíveis

Challenge: Mismatched systems can create significant hurdles in the financial close process, leading to miscommunications and errors.

Opportunity: Streamlining technology integration and ensuring system compatibility can improve workflow efficiency and reduce costly delays.

5. Proper resourcing

Challenge: Having the right resources is essential for finance teams to close the books efficiently and accurately. Without sufficient tools or support, the financial close process can become rushed and error prone.

Opportunity: Optimizing team allocation, investing in training programs, and ensuring access to the necessary technology can enhance resourcing, enabling the finance team to execute a more efficient and error-free financial close process.

6. Disparate teams

Challenge: Coordinating across remote teams in different time zones can create challenges, making collaboration difficult.

Opportunity: Implementing workflows and scheduling regular cross-team meetings can significantly improve coordination and alignment among disparate teams, ensuring a smoother financial close process.

Streamline your month-end close with Prophix One™

Implementing a close checklist can help you overcome common month-end close challenges and deliver insights faster, helping position finance as a strategic advisor within the business.

The great news is that many finance leaders are already making their month-end close smoother with Prophix One, a Financial Performance Platform. You can join them and see amazing results like these:

• Ravago improved their data quality for month-end reporting and financial consolidation.
• Galapagos shortened their close timeline with guaranteed audit trail quality and complete traceability.
• Alter Domus can consolidate their data according to multiple accounting standards, including IFRS, LuxGAAP, USGAAP, and FrenchGAAP.

FAQs about month-end close

How long should month-end close take?

The duration of your month-end close can vary depending on the size of your organization, the quality of your data, and your industry. However, a month-end close that takes less than five days is very efficient, and a close that takes more than 10 days has significant opportunity for improvement through automation.

How can month-end close be improved?

You can improve your month-end close by establishing a single version of truth for your data, standardizing processes, and automating reconciliations, all made easier with finance technology like a financial performance platform.

What makes an efficient month-end close?

An efficient month-end close can be achieved by using a month-end close checklist or template to manage processes, ensuring that everyone on your team understands what’s required, improving the speed and accuracy of your financial close.

What is month-end reconciliation?

Month-end reconciliation is the process of verifying financial records by matching transactions, including expenses and revenues, to ensure there are no errors or inconsistencies in your data or financial reports.