For many businesses, month-end closes are a scramble to chase down missing invoices and double-check entries, hoping everything balances out. But it doesn’t have to be chaotic. One of the best ways to bring some order to this monthly chaos? A well-organized month-end close checklist!
In this article, we’ll provide you with one, along with answers to your common questions and other important information to improve the process for your business.
What is a Month-End Close Checklist?
A month-end close checklist is a structured list of the tasks your accounting or finance team needs to complete at the end of each month to officially close the books. Also known as a to-do list for your financial records.
The checklist guarantees every transaction from the month is accounted for, all necessary adjustments have been made, and your financial statements are ready for review.
In practice, this entails:
- Verifying that all income and expenses are recorded.
- Reconciling accounts.
- Reviewing any pending invoices or bills.
- Finalizing financial statements like the balance sheet and income statement.
When you have a straightforward, concise checklist, your odds of maintaining consistency and catching potential errors before they roll into the next month substantially increase.
Why is a Month-End Close Checklist Important?
As tedious as closing out each month with a checklist might sound, this step is a benefit for your business’s financial health.
Here are four big reasons to implement a month-end close checklist:
Accuracy and Error Reduction
A checklist forces you to systematically review each aspect of your finances so nothing falls through the cracks.
This process helps catch mistakes early. A checklist to refer to rather than winging it each month allows a financial team to catch errors that might otherwise be missed.
Better Decision-Making and Continuous Improvement
When your books are accurate, management can make informed decisions based on reliable monthly data, rather than guesses. The month-end close process also highlights inefficiencies or unusual items so you can address them proactively, which leads to ongoing improvements.
Efficiency and Time Savings
Closing each month may be extra work, but it saves time because you catch and fix issues before they pile up. Come year-end or tax season, you won’t face a mountain of unchecked data because you’ve been keeping up monthly.
In fact, a consistent month-end process streamlines the workflow and prevents last-minute surprises. Automation tools can further speed up the closing process by taking care of repetitive tasks and reducing human error.
Compliance and Audit Readiness
Regulatory standards require accurate periodic reporting. Completing a monthly checklist goes a long way in bolstering compliance.
With detailed, closed books for each month, you’ll find that external audits and tax filing are much simpler.
What Tasks Should Be Included in a Month-End Close Checklist?
So, what exactly goes on this checklist? Every business is bound to have slight variations, but most month-end close checklists include a core set of tasks that cover your bases.
Here’s a detailed checklist of the non-negotiable month-end close tasks:
1. Record All Transactions for the Month
Gather all financial transaction records and confirm that each income and expense is recorded in your accounting system.
These include:
- Sales invoices (for products sold or services provided).
- Vendor bills and receipts (utilities, rent, office supplies, subcontractors).
- Bank deposits and withdrawals (including transfers between accounts).
- Credit card statements and individual card transactions.
- Payroll entries (wages, taxes, benefits, reimbursements).
- Loan payments (separating principal and interest).
- Inventory purchases or adjustments (if applicable).
- Customer payments and refunds.
- Prepaid expenses (e.g., insurance, subscriptions).
- Interest income or bank fees.
- Miscellaneous income or one-time expenses.
2. Reconcile Accounts
Reconcile your bank accounts by matching your records against bank statements to catch any discrepancies.
You’ll also need to ensure your accounts receivable and accounts payable are up to date—all customer invoices and payments are accounted for, and all supplier bills have been recorded or paid.
3. Review and Record Accruals or Adjusting Entries
Account for items that may not yet be reflected in the accounts. Record any necessary accruals or deferrals to ensure that expenses and revenues are recorded in the appropriate month.
Adjust for any prepaid expenses used up during the month or depreciation of fixed assets. This way, you’ll know the financial statements for the month reflect all earned revenue and incurred expenses of that period.
4. Review Inventory and Fixed Assets
Does your business have inventory or fixed assets? Then your next step is to make sure your records match reality. Double-check that all major inventory changes (purchases, sales, write-offs) are recorded, and investigate any considerable discrepancies.
Then, move on to verifying that any new asset purchases are recorded, disposals are removed from the books, and post the monthly depreciation for your fixed assets.
5. Get Your Financial Statements Ready
Once all the above steps are done, generate the key financial statements for the month— typically the Income Statement (Profit & Loss), Balance Sheet, and Cash Flow Statement.
These reports reflect your company’s performance and financial position at the end of the month. Inspect them for any glaring errors or big changes that need explanation.
Don’t miss this article next: Balance Sheet vs. Income Statement.
6. Final Review and Close
Have a second pair of eyes (like a manager or controller) review the financial statements and all reconciliations. This review can catch any remaining issues.
Once everything looks correct, mark the period as “closed” in your accounting system to lock in the data and prevent further changes.
This checklist covers the vital activities like reconciling accounts, verifying receivables/payables, posting adjustments, and preparing statements.
This month-end close checklist template is a great start, but depending on your business, you might need to add some extra steps.
The core idea is to ensure every financial transaction is accounted for and the numbers are finalized for that month.
Streamline the Month-End Close Process and Overcome Common Challenges
Your month-end close process taking longer than you’d like is one of the most common challenges businesses face. Often, the process is also error-prone, scattered, and fundamentally inefficient.
Fortunately, there are many things you can do to address these challenges, beginning with following certain best practices.
Here are five of them:
Create a Closing Schedule and Assign Responsibilities
Set a timeline for when each part of the close should be completed.
This can look like having all expenses recorded by Day 1, all reconciliations completed by Day 3, and draft financials prepared by Day 4, for example. Assign each task on the checklist to a specific team member, so everyone knows their responsibilities.
With a well-defined schedule, you can prevent bottlenecks and last-minute rushes.
Automate Where Possible
Accounting, month end close software, and add-ons can automate many tasks, from bank reconciliations to generating reports.
Put technology (like accounting automation tools or spreadsheet add-ins) to work for you. This can reduce manual work and errors in an impactful way.
For example, bank feeds can automatically import transactions for reconciliation, and software can flag anomalies for you. Automation not only saves time, but it also standardizes tasks for consistency.
Train and Cross-Train Your Team
Ensure your accounting team is well-trained on the close process and understands why each step is done.
Cross-training team members on different aspects of the close is also helpful; for instance, more than one person should know how to perform the bank reconciliation or prepare the financial statements.
A well-trained and versatile team helps the close go smoothly, even if workloads shift or someone is unavailable.
Review the Process Each Month to Look for Areas to Improve
After closing each month, do a quick debrief. Identify what caused delays or problems. Perhaps information was hard to get, or a specific account always has issues reconciling.
Keep a close eye on these pain points so you can tweak the checklist or process next time. Over a few cycles, these incremental improvements will make the month-end close faster and easier.
We also have a comprehensive year-end close guide here.
Don’t Procrastinate
The month-end close process shouldn’t start on the last day of the month. Whenever possible, perform parts of the close throughout the month.
For example, reconcile bank accounts weekly instead of doing it all at once at month’s end.
Some companies even do a short “pre-close” a few days before month-end to catch major issues. Spreading out the work makes the end-of-month crunch a lot more manageable.
The effort you put into implementing these best practices can pay off. Following a checklist allows you can transform the month-end close from a mad dash into a well-oiled routine.
In many cases, companies that invest time improving their close process can complete the month-end close in just a few days rather than weeks.
Let’s Make Your Month-End Close Process Less Stressful
When you bring structure to your month-end close, you save time, reduce stress, and get more accurate financial data to guide your business. But if your current process still feels disjointed or overly manual, you’re not alone, but you don’t have to settle for that.
Datarails helps finance teams automate the close process, reduce errors, and free up time for analysis instead of data wrangling.
So, if you’re ready to streamline your monthly close with a solution that works with your existing tools, request a demo with Datarails and see how much easier your next close can be.
