1.0 Introduction

Understanding the Importance of Month-End Close

It’s that time of the month again when you need to submit your monthly accounting reports to your accountant. Before you do that, it’s important to check if everything is in order and comply with all the necessary regulations. Don’t worry; our month-end close accounting checklists, drawing from authoritative sources like Financial Management Standards Board and International Accounting Standards Board, will help you with just that.

No matter how small or big your business is, these checklists can help keep everything running smoothly. By following these checklists, you’ll be able to keep track of earnings, expenses, and other crucial financial data. Plus, by doing this every month, you’ll be able to avoid any costly mistakes down the line. So, whether you’re a start-up or an established business, make sure to follow these month-end accounting checklists!

At the end of this post, readers should be able to answer the following frequently asked questions about Google:

• How do I make a month-end close checklist?

• What is the month-end accounting procedures?

• What accounts need to be closed at the end of the month?

• How do you prepare your monthly financial statements?

2.0 The Growing Importance of the Month-End Close

Transactions may now be managed in real-time, and the state of the books can be determined instantly, thanks to the growing use of technology and automated processes, a trend noted by a report from the Financial Executives Research Foundation. Setting aside a specific time at the end of every month provides an opportunity to reflect on the events that took place during that period and to close the books “forever.”

Benefits of Month-End Close

Our process complies with many statutes and regulations. For example, PAYE, VAT, WHT, and pension returns are expected to be filed monthly, as mandated by regulatory bodies like Internal Revenue Service and Securities and Exchange Commission. This practice also offers management an opportunity to reset and plan after each calendar month. It is recommended by the Chartered Institute of Management Accountants.

For example, if a company does not close its books at the end of the month to determine its sales, it is unlikely that it will file a valid VAT for that month. The use of checklists in the finance departments of structured firms is customary practice, cited in studies by Journal of Accountancy, to determine whether all the tasks needed to close the books monthly have been completed.

A month-end closure checklist is a beneficial tool that can help to improve the efficiency of the month-end closing process in general. In addition to helping to keep everyone involved in the process well organized and informed, it can also help the organization save money by reducing the need for compilations, reviews, and audits, as noted by the Association of Chartered Certified Accountants.

3. The month-end close process

A month-end close process is a set of steps that companies take to finalize their results for the month and prepare their management report. It also involves a review of the month’s activities, both financial and non-financial. This involves recording, reconciling, and reviewing all business transactions before the month-end is done, along with finalizing account information for the month.

It is important to be aware that, although each company may have its own unique process, there are some common steps that most companies follow.

The importance of the month-end close process

The month-end close process is important because it helps to ensure that all the financial transactions that occurred during the month are properly recorded and accounted for. This process also helps to ensure that all the financial statements reflect the true financial position of the company.

A few benefits of the month-end close include the following:

• Find mistakes in your financial records.

• Make smart business decisions.

• Address any concerns as soon as possible in your company.

• Catch-up bookkeeping saves you time and money.

• Make tax filing less complicated.

• Keep precise and up-to-date financial records for stakeholders.

Why is a monthly end-close checklist essential?

A month-end close checklist aids accountants in recalling items that they might otherwise forget during the month’s close. It is beneficial to minimize data entry and omission errors.

With the help of a month-end close checklist, you can ensure that essential balances such as cash and inventory remain correct from one month to the next.

Month-end close checklists help organizations save time by reducing the amount of time it takes to collect and make internal financial data available.

A month-end closure checklist is a beneficial tool that can help to improve the efficiency of the month-end closing process in general. It can also help the organization save money by reducing the need for compilations, reviews, and audits.

4. Building a Successful Month-End Close Checklist

The checklist helps streamline your closing processes. Here are a few things to do:

1. Record all the activities and transactions that take place throughout the month.

2. Update Receivables and payables.

3. Make sure you have all your bank accounts reconciled.

4. Go through the petty cash and make sure everything is correct.

5. Conduct a review of the stock levels.

6. Review all fixed assets.

7. Reconcile prepayments and expense accounts.

8. Prepare management accounts.

9. Review everything in your financial records.

5. Suggestions for Effective Use of the Checklist

1. Creating the checklist much further in advance of the month is critical. Keeping a running list of timetables and trackers will aid you in staying on top of what needs to be accomplished, a suggestion endorsed by the Project Management Institute.

2. Begin with the reconciliation of your bank account. Small business activities typically entail using bank accounts to a greater extent. Maintain daily bank reconciliations to reduce the time needed to close the books at the end of the month.

3. Change the items on your checklist so that they fit with your company’s financial and management goals. Keeping the checklist up to date will ensure that it continues to be valid.

4. Assign clearly defined areas of responsibility and the evidence that must be in place to prove that everything is complete. It may be all too easy to mark an item as “completed” on a checklist, even if not completed in the first place.

5. Use it in Google Sheets or any other dynamic platform. You can ensure that the information is always up to date.

6. When the checklist is complete, you should lock the financial information for the month it’s for to keep it safe, a best practice by the National Institute of Standards and Technology. Do not make changes to the information inside without the permission of the top management. Changing things without permission after the end of the month lowers the value of the checklist as a whole and the process.

6. Conclusion

Some Accounting software packages include a built-in month-end closing feature to help the accountant. Download a small business month-end closing checklist template in Excel HERE. Please feel free to make any necessary changes to suit your company’s needs.

By following these simple month-end checklists, you’ll be well on your way to ensuring that your small business is in good standing at the end of the month. From making your income statement to balancing your bank accounts, our checklists will help you get the most out of the end of the month and improve the financial health of your business. Do you have any questions or suggestions about how we can make these checklists even better? Let us know in the comments below!

By using month-end checklists, you can effectively manage the month-end financial close process and stay on track with your business goals. Let us help you put together a checklist that will help you keep your business running smoothly all month long!

About the Author

Ajibola Jinadu is a globally recognized finance and accounting expert with a rich 15-year career across three continents. Specialized in startups and small businesses, his deep financial knowledge enables him to create effective strategies. His experience includes strengthening small businesses’ financial infrastructures and improving cash flow. Ajibola’s unique insights combine international experience, accounting expertise, and hands-on startup involvement.

Disclaimer: The information contained in this article is provided for general informational purposes only and should not be construed as financial advice.