Here's my 80+ pg MEGA GUIDE on Month End Close
Month End Close is one of the most common tasks for an accounting function.
➡ What Exactly is a Month End Close?
While many may define this differently, to me, a month end close is a RECONCILIATION & SIGN OFF on a company’s financial statements
➡ What are the Steps in a Month End Close?
Here are my preferred steps:
1️⃣ CLASSIFY ALL TRANSACTIONS TO GL ACCOUNTS
All of your bank & credit card transactions should automatically flow through to your accounting software, allowing you to easily start classifying to your General Ledger accounts
When classifying accounts, keep these tips in mind:
⏩ Include a vendor / customer name on all transactions to allow for further reporting & analysis
⏩ Bulk classify transactions for the same vendor that belong to the same category to save time and stay efficient
⏩ Put all transactions you are unsure of to uncategorized expense / income, and revisit at the end. Don't let it hold up your month end close!
2️⃣ RECONCILE ALL BANK & CREDIT CARD ACCOUNTS
Bank reconciliations are IMO the most important piece of a month end close - without it, you don't have any credibility on the numbers being presented
Bank recs are a matching of the balances / transactions from your bank & credit card statements to your general ledger balances
3️⃣ BOOK ADJUSTING JOURNAL ENTRIES
Here comes the real work in a month end close - adjusting journal entries.
Common ones are Prepaid expenses, Deferred Revenue, Depreciation....the list is endless
The key here is to have rock solid workpapers, typically in excel, helping you both validate & calculate the adjustments / balances
4️⃣ CONFIRM ACCURACY & FINAL REVIEW
Here, it's time to zoom out and review all of your work - this is an important step!
I like to first start by scanning the month over month P&L, Balance Sheet, and Cash Flows for anomalies
🤔 Do any accounts show large swings in balances?
🤔 Are there any new accounts that can be merged with existing accounts?
🤔 Do any accounts have missing values?
From there, I'll do a final review on all transactions posted to ensure everything is coded correctly
Once you've completed the steps above - you're all set!
And you can then move onto distributing the financials, performing analysis, and so much more
Those are my guide tips for the Month End Close - everyone does it differently