Month-End Close Process: Checklist Template & Tips From an Outsourced Accounting Advisor

Struggling with a 10-day close cycle, last-minute workarounds, and late nights? 

I get it. 

That’s why our outsourced accounting team, Powered by Centri, put together this helpful guide. No email required. No gatekeeping. Just helpful info you can use to start fixing your month-end close process now. And if you are looking for more advice, connect with me on LinkedIn for more accounting tips!

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Keep reading further to find:

• Help diagnosing where your month-end close process is breaking down.
• Advice on what a good process includes (based on my real experience as an outsourced accounting advisor).
• Tips to make the month-end close work better for you.

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Do You Have a Process Problem or a One-Off Problem?

Diagnosing Your Accounting Close Processes

If you’re reading this because your month-end close process recently got derailed, it’s important not to just jump into a checklist, but to ask why it’s slowing down. What’s the root cause?

I’ve provided outsourced accounting support to many businesses throughout my career, and common reasons I see the month-end close break down include:

• Industry-specific challenges. E.g., industries like construction, where there is a lot of purchase activity, and doing certain tasks preemptively doesn’t work.
• One-off scenarios. These are unique and may stress a month-end close by stacking up and delaying it, but they don’t mean your process is inherently broken.
• Lack of communication. People in your team aren’t aware of deadlines, their responsibilities, or what the proper procedure is to keep the month-end close moving. 
• Missing or underleveraged tools. Not having the right software or having tools that don’t talk to each other or lack the right setup will hurt your ability to close on time.
  

I’m all in favor of improving workflows and processes. But it’s also good to reflect and ask if that’s the only piece of the equation putting pressure on your month-end close.

In my experience, sometimes it’s a domino effect. 
That’s when having someone outside your team can help. I’ve helped many businesses in many industries, and because of it, I’ve seen a lot. I’ve learned sometimes the fix isn’t just the month-end close process — but in fine-tuning all the factors between your team and tools.

What Does a Good Month-End Close Process Include?

A list of pre-close activities you can do.

Consider working ahead on items you can clear early, like accruals and estimates. Anything that’s a predictable amount can be done early to help close your books faster. I’d consider looking at:

• Cash activity 
• Accounts payable
• Accruals
• Accounts receivable
• Deferred revenue
• Revenue recognition
• Prepaid expenses
• Fixed assets

Clear ownership over each part.

Build a detailed checklist of your month-end close process steps. In that list, assign who is responsible for each piece and label what needs to be done by which day. Make sure your deadlines are specific so that everyone is clear what their role is.

Transparent and timely communication.

Having an accounting month-end close checklist is a starting point. Building clear communication is what makes it successful. As you discuss what you need from others, consider:

• Setting up a protocol to assess progress or flag unusual activity that will impact closing ahead of time.
• Creating a clear policy of what needs to be shared and why. If people understand the consequences of delays, they may be more compelled to adhere to deadlines.
• Building a system to flag those deadlines. That way, you can directly address the issue with those involved when due dates are missed.
• Designing a flow in your inbox to flag emails that need follow-up and clearly organized folders so they’re easy to track down.

Efficient tools and month-end close automation.

I know AI is probably top of mind for you. Should I be using it? How should I be using it? However, it’s important to simply invest in the right tech stack first, then address that question.

Once you have tools that support the financial close process, using them properly is key too. Otherwise, you won’t see the net positive from having them. I’m a fan of Floqast if you are looking for a recommendation to help enhance the month-end close process

Floqast connects to your ERP and makes it easy to set up rules, workflows,  reconciliations, and roll-forwards. This frees up manual hours and means you can focus on more complex journal analysis instead. Floqast also includes AI features so you can make sure your workflow is using the latest technology to keep your business running efficiently. 

A post-review process.

Keep a log of issues from month to month. What didn’t work well? Over time, record keeping can help you clearly identify problematic patterns vs. one-off unique situations. That way, you have a feedback loop on how or what needs to be improved to streamline your month-end close process.

Month-End Close Shouldn’t Feel Like a Punishment

Here Are My Tips for Making It Work Better for You

• Try doing a light or soft close in months 1 and 2 of each quarter, if you can.
• Consider closing accounts that won’t have activity in the same month. (Deposits, prepaids, fixed assets, etc.)
• Do daily and weekly bank reconciliations.
  • Try doing payroll accruals with the last payroll register of the month instead of what lapses at month-end.
  • If bonus accruals are established at the beginning of the year, it can be booked before the month is over since it’s a known number.
• Make sure the tools you have interact well with each other, as any silos between them will reduce the benefits of using them. Plus, it increases the risk for manual errors.
• Create a clear expectation. For example, “requests need to be in by X day at noon, otherwise they won’t be posted.” Communicate these to stakeholders/managers outside of finance. 
• Reframe your mindset — it’s not a single event, but instead an ongoing event. 

Skip a Chaotic Month-End Close

In my experience, the month-end close is most challenging if you let everything stack up. Also, if you’re an owner or a leader where this accounting work is only a piece of all the jobs you do… it might be time to consider if outsourced accounting is right for you. 

Instead of sinking hours into managing the details of your month-end close, you can focus on projects that impact your bottom line. Like expanding into new markets, putting hiring dollars toward talent outside the accounting function, or marketing, to name a few.

Most importantly, as you grow your business, you’ll also have confidence in the accounting powering it. You’ll have accurate and properly executed financials backing your business decisions as you expand.

With Powered By Centri, you get:

• Experienced accounting professionals and senior-led support
• Up-to-date knowledge of industry trends and regulations
• Customized support that includes outsourced controller or CFO services
• Access to the best technology and resources from the fastest-growing firm in the U.S.
• Strategic advisory beyond closing, so you have data to support decisions on hiring, product/service expansion, finding where cash is trapped, M&A considerations, etc.