Month-end close
The set of tasks an accounting team completes after each month ends to make the books complete, accurate and ready for reporting.
In short
- Typical steps: capture all transactions, reconcile accounts, post accruals and adjustments, review and report.
- Many teams aim to close within five business days.
- Most delays trace back to missing documents and late information, not to accounting itself.
The month-end close is the process of finalizing a month's financial records. It ensures every transaction is recorded in the right period, every balance sheet account is supported and the financial statements can be relied on.
Typical steps
- Cut-off: make sure all sales, purchases, expenses and payroll for the month are recorded.
- Reconciliations: bank and card accounts, receivables, payables and other balance sheet accounts are agreed to supporting records.
- Accruals and adjustments: record costs incurred but not invoiced, amortize prepaid expenses, book depreciation and defer revenue as needed.
- Intercompany and consolidation: for groups, agree and eliminate balances between entities.
- Review: compare results with budget and prior periods, and investigate unusual movements.
- Reporting: produce financial statements and management reports, then lock the period.
What slows it down
The accounting steps themselves are usually well understood. Delays come from upstream: receipts that employees haven't submitted, invoices waiting for approval, card transactions without documentation, bank feeds that were never reconciled during the month. Teams that close quickly tend to do much of the work continuously, matching and coding throughout the month so that month end is about review rather than collection.
Worked example
From twelve days to five
A 90-person company takes 12 business days to close. Most of the delay is chasing receipts for 400 card transactions and collecting approvals for late invoices. By capturing receipts at the point of purchase and reconciling cards weekly, it reduces the month-end backlog to about 30 exceptions and closes in five days.