How to Use Financial Automation to Improve your Month-End Close Processes

Between the myriad of daily tasks that finance professionals are responsible for, closing month-end books and managing year-end close processes can be a grueling affair. This is particularly true when your company requires multiple levels of sign-off for each account and often requires decision-makers to review/approve countless automated financial reports/memos outlining the balances in various accounts. Automating some of these processes is a must for many businesses. 

Enter financial automation- the process of creating automatic business functions so that routine activities don’t have to be handled by an individual. A rising trend in the business world, it’s a combination of software and process design that helps streamline your company’s finance processes. 

This blog post will explain what financial automation is, why you should be automating your month-end processes, and most importantly how you can start automating today.

What is financial automation?

Technically, financial automation involves integrating machine learning and artificial intelligence in the latest technological advances to automate financial operations. Some features of financial automation software include:

1) Robotic Process Automation (RPA)

RPA bots are specialized agents that automate secretarial tasks using screen-scraping technology. This tool is used in the finance department to perform repetitive tasks, allowing the human team members to focus on other more productive activities.

Finance industries such as banks provide enhanced customer service through RPA. This enables them to digitally transform themselves and gain a competitive edge over others in the banking sector.

2) Document automation

Document automation enables the automatic generation and processing of electronic documents such as agreements, proposals, and even invoices through Optical Character Recognition (OCR) and machine learning. It allows you to transform your documents into intelligent templates and use them to generate accurate documents and records. When you automate your documentation process, you are able to keep your documents and communications up to date with changing directives and regulations.

3) Machine learning

Financial automation uses machine learning algorithms to learn from past transactions and perceive decision-making patterns and use these decisions to make future choices. The finance department can use machine learning to run simulations so that they can prepare for all possible future scenarios.

The leading functional destination of ML algorithms is to prominently identify work patterns and correlations among vast amounts of information, events, operations, and sequences.

4) Artificial Intelligence (AI)

AI plays a big role in financial automation, as the past year has seen a huge increase in AI tools for finance and FP&A. AI can help with forecasting and scenario planning, identifying errors and discrepancies in the data, and even generating storyboards with a click of a button. AI will propel financial automation and can change the way we work in all types of financial categories that will be mentioned below.

Financial processes that can benefit from automation

Not all aspects of financial procedures need to be automated for a more efficient operation. However, some key areas are tedious and would benefit significantly from automation. These include:

1) Accounts Payable

You need a holistic approach when you decide to automate your accounts payable (AP) process so that you can improve efficiency at each step. These steps, which include invoice data entry, payment executions, and invoice approvals, are time-consuming and require a lot of human intervention when done manually. By automating all the steps of AP in one optimized workflow, you can:

  • Simplify the transitions between each stage of AP
  • Centralize all AP operations
  • Preserve all payments and approval details together.

Account automation allows the processing of all company invoices to be performed automatically without the need for human intervention. You should automate accounts payable to:

  • Prevent fraud —  without the use of physical documents, fraudsters are unable to get away with fraud by altering or fabricating evidence using fake physical documents.
  • Save time — you can reduce the time your financial team would spend when performing manual tasks such as writing up an expense report which would take approximately 20 minutes and 20 more minutes to rewrite if it has errors.
  • Reduce errors — time-consuming manual tasks tend to wear out a person, and they are more prone to make mistakes when they are tired. This causes the business to lose time and money.

2) Account Reconciliation

You can reduce the risk of human error by automating data flow and streamlining many of the reconciliation steps. Critical activities in the reconciliation lifecycle include data import and export, generation and delivery of reports, and transaction matching, all of which can be done without user intervention when the process is automated. 

With an effective automation system, companies can cross-check balances from bank statements to their ledgers. You can also prepare accurate reconciliation statements.

3) Financial planning and analysis

This includes preparing and compiling financial statements by the various departments in Financial Planning and Analysis (FP&A).

A flexible FP&A software can allow you to customize the financial planning processes according to the needs of the organization. Analyzing data is made more accessible by the software, which will enable you to collect and collate data from across all departments.

The month-end close process

Although a very labor and time-intensive task, financial closing is a crucial aspect for any business’s success. During the month-end close process, the finance department busies itself with ensuring that discrepancies are reconciled to provide more accurate financial statements that reflect a company’s actual financial state.

Ideally, the month-end closing process should be fast and smooth and should take about three to four days to complete. A well-executed month-end close helps improve organizational performance. You can create a month-end checklist to ensure that the process runs smoothly. 

To make sure that your month-end closing process is organized and accurate, you need to:

1) Reconcile all your accounts

You need to reconcile all your accounts by matching your account statements’ records to those from outside entries such as banks. Breaking down your accounts into categories makes it easier to catch errors and keep the records accurate. You can break down your accounts into;

  • Bank loans and notes
  • Cash, check, and savings accounts.
  • Accrued or prepaid accounts.

Once you have broken down the accounts, you can start working on one category and work your way up the others.

2) Count your inventory

It is advisable to perform monthly inventory counts to make sure that your inventory is correct. By doing so, you’ll be able to record inventory levels accurately in your books at the end of the month. An accurate inventory count will enable you to make adjustments while reconciling your books during your month-end process.

3) Review your petty cash funds

If your business has a petty cash fund, it needs to be accounted for at month-end. It would be best if you balanced the petty cash by ensuring that the receipts of the items bought using funds from the petty cash match your records. 

Ensure that you always record all transactions done using petty cash and keep the receipts to prevent errors that may occur due to loss of receipts or lack of a record for particular transactions.

4) Record incoming cash

Funds received during the course of the month need to be recorded when closing your books at the end of the month. You will need to account for some incoming cash for funds from loans, revenue, and invoice payments.

Invoices need to be compared with your records to ensure that you are not missing any clients’ payments.

5) Record any payments related to your fixed assets

A company’s fixed assets include things like vehicles, furniture, building, and land. These assets generally do not directly convert into cash and will most likely depreciate over time.

Any payment made related to your fixed assets such as rent and vehicle service fees need to be recorded when closing your books at the end of the month.

6) Regular update of accounts payable

Keep your accounts payable up-to-date by organizing your receipts and noting down your purchases. You need to cross-check your records to ensure that all your bills and invoices are paid before or during your month-end process.

7) Review your revenue and expense accounts

You need to confirm that your revenue and expense accounts are accurate by the month-end close. Find out if the prepaid expenses and accruals are recorded correctly and in the correct accounts.

8) Prepare for the next month

It would be best to prepare a monthly calendar to help you with the closing of your books for the next month. You can use your calendar to plan out the times and dates to collect financial reports from the different departments when to record the transaction, and finally close the books. 

You should communicate this information to the relevant parties involved in the process. With time, you can tweak your calendar to accommodate any changes that may occur or when you find an approach that works for you.  

Importance of closing your books monthly

  • The accounting month-end close process is essential because it provides a solid foundation for future decision-making through the generation of financial statements that accurately reflect the business’s true financial position during the month.
  • It provides regular oversight of internal finances, ensuring that the company is compliant with internal and external financial and regulatory standards.
  • It keeps your books and financial statements accurate and backs you up during an audit.
  • It prepares you for the future and helps you prevent future mistakes.
  • It makes it easy to file your taxes.

What to consider when choosing Financial Automation software

Each business has its unique bookkeeping requirements. Several software packages enable enterprises to control their financial processes, including Quickbooks and Sage, among others. So when choosing the right financial automation software that best fits your business needs, you need to consider whether the system:

  • Has a customer management system
  • Can work with multiple bank accounts
  • Calculates all payroll requirements
  • Tracks different financial records for each department within the business
  • Can work with foreign currency
  • Tracks task management activities such as taking stock and work orders.

If you still can’t make up your mind on which software to choose, you can find out from other business owners what software they use or ask your business advisors for advice.

Benefits of using financial automation for month-end close processes

The idea behind financial automation for individuals is the creation of a budget based on their income and goals. The idea is the same for businesses but on a larger scale. Financial automation helps businesses meet their financial goals without taking the penny-pinching approach.

An automated financial system benefits the month-end close process by acting with speed, transparency, and efficiency. Some other benefits include:

  1. Real-time reporting and data collection

With financial automation software, users are able to view real-time dashboards that display vital information regarding the status of a financial report. With access to real-time data, a business can make decisions based on factual data at any time without waiting for the end of the month to have access to accurate data.

  1. Better tracking for the whole process

Month-end close processes are time-consuming, and tracking the process’s status or progress is sometimes done poorly or not done at all. Month-end close software improves the process, making it transparent with real-time snapshots of the process’s progress and status. This speeds up all the activities, including corrections and the workflow.

  1. Save time

A lot of time is saved if the month-end software is from an intuitive software source and vetted by professional accountants. An efficient month-end close system is one that is developed by actual accountants who know better the needs of other accountants. 

Such software usually has an interactive user interface making it easy to use, helping accountants free up their schedules so that they can concentrate on more practical and productive projects.

  1. Reduces errors

With month-end automation, financial calculations have been relegated to computers that are less likely to make the errors that an accountant would make. Mistakes made by accountants during the month-end close are usually tricky to recognize and correct in time. 

Using financial automation ensures that you avoid errors in the reconciliation of balance sheets that result from copy and pasting formulas and month-end balances.


Produce accurate financial statements and reduce the time it takes to prepare your month-end close process reports by harnessing the power of technology. 

An automated financial month-end close process will allow the finance team to prepare detailed and up-to-date reports with detailed information that managers can use to make better decisions regarding the future of the company.

About Datarails

Datarails is an FP&A solution that allows for the connection and centralization of all organizational financial data from various systems (ERP, GL, CRM) alongside Excel spreadsheets and operational data. It also allows for the creation of automated reports (P&Lcash-flowbudgets, etc.), as well as a thorough analysis of consolidated data for the creation of business and financial insights.