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Collectively, these solutions act as rocket fuel for your closing, driving speed and accuracy while significantly reducing – often eliminating – time spent on manual data entry and approval. Thus, analyzing volumes can provide valuable insights into areas where you can improve and optimize. Begin this step by determining who enters, reviews, and approves the journal entries.

  • To use your financial information as an effective planning and strategic tool, you need to get into a regular cadence of closing your books.
  • Remember, their time is limited during the close process, so identifying and addressing any inefficiencies or bottlenecks can be a massive octane boost to your workflow.
  • To learn more, see our guide on Cash Basis Accounting vs. Accrual Accounting.
  • Accounting reports contain a large amount of data and are subject to duplicate entries, omissions and other errors.
  • Establish a standard procedure to ensure accuracy in financial reporting and reduce errors caused by inconsistent accounting standards or manual calculations.

Use all the system’s features to streamline the closing process – and make your finance team’s daily work easier. The month-end close is a regular process at the end of each month in which a company’s financial and accounting records are reviewed and closed. During this process, revenues, expenses, profits, losses, and other financial metrics are recorded, reviewed, and prepared for reporting purposes. It’s crucial to centralize all types of transactions in one place, including expenses and revenue. Utilizing spend management software with multiple user accounts allows your accounting team to verify transactions across the entire company. Labels can be employed to categorize and visually present spending more effectively.

If your accounting department is bogged down with manual data entry, sorting, and Excel spreadsheets, they’re bound to get caught in a vicious cycle of never-ending, backward-looking reporting. Keeping track of revenue from product sales and services ensures that your business is on track with your forecasted ARR and sets you up for compliant tax filings later. Align with sales and sales ops leaders to get a basic idea best way to crowdfund a nonprofit of where the revenue numbers will fall for the month. Be sure to have sales ops clean up any data entry issues before you start closing the books. Review department budgets
Make sure data is accurate on department budgets and tie up any loose ends regarding planned expenses. While there’s a certain level of predictability in expenses and transactional activity, each month may come with new wrinkles to account for.

What is a month end close process?

These include accrued expenses, amortization, depreciation, loan interest, and prepaid expenses such as insurance premiums. The month-end closing process is a set of activities that companies perform at the end of each month to finalize their financial statements. The more you can streamline and standardize your closing processes, the faster you can tackle closing. After applying the strategies I’m sharing in this article, I was able to bring it down to 5 business days. The month-end close finalizes and concludes all financial activities for the previous month, marking a well-defined accounting period.

Since it’s a required process in the business and one that happens so frequently, it’s of high priority to optimise. Technology and automation solutions like SolveXia are designed to help your team function at its highest potential! Make use of these tools that can reduce errors, automate repetitive tasks, and provide the much-desired increased visibility and standardisation into the process.

You and your team should prioritize critical functions so they’re completed first. Artificial intelligence and machine learning can be advantageous here; technology saves time and reduces the risk of human errors. It’s important that when the time comes for closing, everyone knows their roles and deadlines.

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With cash basis accounting, you won’t have balance sheet accounts, such as accounts receivables and accounts payables. To learn more, see our guide on Cash Basis Accounting vs. Accrual Accounting. With a month-end closing checklist and a bookkeeping habit, you can scale the summit with ease and manage your finances well. More importantly, staying on top of your financial data will help you achieve your long-term business goals.

Reconcile Loan Accounts

Valuation ensures that the financial statements include all financial transactions aligned in a uniform currency. Have a look at our tutorial on foreign currency valuation to understand the configuration steps that must be set up for revaluation to function. Journal entries of recurring monthly transactions must be performed at the time of the month end close. This applies to such transactions as accrued expenses, amortization, depreciation, and loan interest. Company B, a medium-sized retail business with multiple locations, faced similar challenges during their month-end close. They had to gather information from different store branches and consolidate it into a central system manually.

Reconcile data against records

Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills. The easiest way to check a refund’s status is by using Where’s My Refund? For example, most software companies accept electronic submissions and then hold them until the IRS is ready to begin processing later this month.

Revenue Recognition Review

Achieving this on a consistent basis depends on the procedure your team has to work with. The more times you go through the month-end close process, the better you’ll understand what steps to take and how to work more efficiently in the future. Doing so reduces your reliance on last-minute records from external accounting.

Thus, there is a discrepancy between the valuation of the invoice at the time of posting and the exchange rate end of the month. If the invoice is not paid during the same month, valuation should be run. You can also specify customer, vendor or G/L accounts explicitly if you want to target an account. If everyone has access to the reconciliation documents it will be difficult to keep the work error-free when changes are made in an unorganized manner. Having a system where only authorized employees are allowed to access the documents is essential.

The big picture takeaway here is that the closing process costs you valuable time and energy which would be better spent on strategic decision making. You have the power to create better workplace satisfaction, create savings and turn a higher profit. The key benefit to using templates within your financial close is that they standardize operations. Creating a standard operating procedure is proven to improve the speed and accuracy of your month-end process.

Establishing a series of steps and assigning roles for different closing tasks sets expectations and provides clarity throughout the process. It also allows team members to pick up tasks quickly if someone is unavailable or out of the office. Data visibility also negatively impacts bank reconciliation, bookkeeping, cash flow management, and financial forecasting.

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