Improving the financial close process can increase confidence in financial reporting, reduce stress in the accounting department and make financial reports more accurate. Whether books are closed once per year, four times per year, monthly or 13 times, the financial close process causes stress to the accounting department. At its core, a financial close is when you check account balances, identify and resolve discrepancies, and create financial statements. Financial statements reveal your overall business health and allows for accurate compliance reporting.

Complexities in Financial Close Process
For years CEOs have requested accountants close the books in three, four or five days. In turn accountants would love to be able to close the books within a week of period end. However, the close process is complicated by a number of factors.
- All transactions are not captured in the business mangaement software
- Multiple legal entities within the reporting group require intercompany transaction elimination
- Accountability for managers requires allocations and cost accounting adjustments for departmental reporting
- Statistical or other non-financial information included in close process are not included in out-of-the-box reports
- Inconsistent processes result in missing, duplicate or mis-applied transactions which need to be reconciled prior to close.
- Limitations in the business management reporting system’ require manipulation and reporting in spreadsheets
Simplify your closing process by implementing one or more of the following tips.
8 Tips for Improving the Financial Close Process
A streamlined and automated process will reduce your time to close and the stress associated with the financial close.
1. Reconcile Accounts Regularly
Don’t wait until month end to do all of your reconciliations. Most accounting departments reconcile every balance sheet account with activity every month. However, there is no reason not to reconcile more active accounts like cash on a weekly or daily basis depending upon activity and benefit. For example, reconciling cash accounts daily to enable sweeps and transfers to higher yield accounts. Reconciling periodically will reduce the month end peak load and possibly identify process issues that could compound throughout the period.
Many modern business management systems have internal and automated reconciliations. Reconciled transactions can be filtered from screens and reports so balances only contain un-reconciled values. Automated reconciliations typically reconcile clearing account transactions. Internal reconciliations allow for manual offsetting of debits and credits similar to automated reconciliations. Using these features can eliminate separate spreadsheets used to track outstanding balances in prepaid expenses, security deposits and similar balance sheet accounts. This saves time of re-entering data in spreadsheets and the potential errors inherent in duplicate entry and formula maintenance.
2. Capture and Record Business Transactions in Real Time
The key to a clean and timely close is consistently capturing transactions in the business management software in real time. Real time capture of transactions reduces errors, omissions and duplications. For example, by capturing goods receipts when they reach the warehouse, the sales team knows accurate inventory counts and can quote and invoice the transactions properly. Expenses and inventory counts are often double counted when the accounts payable invoice is received prior to recording the receipt of goods. Timely data capture reduces risk of error and the complexity of closing process.
The best way to capture transactions in real time is automation. In the previous warehouse example, bar code scanning can capture data more accurately and automatically update inventory counts and record the resulting increase in inventory with an offset to the purchases clearing account. These kinds of process improvement through technology are the essence of digital transformation.
3. Streamline the Chart of Accounts
Over time the chart of accounts tends to grow. New accounts are created, some accounts are re-used and others just linger with no activity. The larger the chart of accounts grows, the more un-wieldy it becomes. This is especially true when as the number of segments in the chart of accounts increases. Complexity becomes unbearable when a single segment is used for multiple purposes.
Many modern accounting software packages have introduced dimensions on the chart of accounts. Dimensions are different than segments in that:
- Unlike segments you do not have to store them on the chart of accounts or generate the values in advance
- You can have multiple dimensions associated with a single account (such as department, product line, division or project)
- Depending upon the system you may be able to associate validations with accounts and dimension combination or edit dimension values after posting.
- Dimensions can often be populated from other values such as fixed asset records, contracts, loan ID or lot.
Dimensions streamlines your chart of accounts when used for subledgers. Furthermore, dimensions greatly simplify report development. Dimensions also enforce a system best practice of using each field (or segment) for one and only one purpose.
4. Utilize Financial Reporting Software for Complex Reporting Structures
Business management software produce standard financial reports. Balance sheets, income statements and indirect cash flow statements are pretty standard fair. Most also produce comparative statements for actual vs. budget or current vs. prior year. Fewer produce trend reports or multiple comparative periods.
As complexity increases, so does the need for financial reporting software. Many consultants pine for the old Financial Reporting Extender (FRx) which came with a variety of mid market ERP systems. Defined row and column formats applied to content enables reuse by entity, department, division or any other logical grouping. Mondial Software and its modern CRx platform uses similar functionality and adds multi-ERP, multi-currency and multi-book functionality to automate the most complex financial reporting needs. By bringing in all journal entry lines, AP and AR transactions from most any business management software, Mondial can report at the dimension
5. Automate Recurring and Reversing Transactions
Practically every accounting software package has functionality for recurring and reversing transactions, yet quite often they are not being used. Reversing transactions automate removal of month end accruals. Automate month end adjustments for depreciation, amortization, and consumption of prepaid expenses. Setup straight line consumption journal entries when the initial transaction is booked.
We have used no-code/low-code tools to automate the setup of automated transactions. For example, a company who received advance payments for a monthly service would book the sales transaction via the normal invoicing process. Adding the transaction triggered a process to create a recurring transaction which recognized the revenue over the contract term. Reporting on the unearned revenue by contract was automated using a “project dimension” on the customer and journal entry.
6. Design and Define a Detailed Closing Schedule
Today’s modern ERP are date driven and do not require a “hard close.” Most accounting departments have a closing schedule. The closing schedule enables that hard cutoff and close to prevent changes to prior periods. Senior management may insist on quarterly or annual hard closes while allowing soft monthly closing. The key to creating an efficient financial close is clear communication of the requirements and process.
Clear requirements enable the monthly close process definition. The schedule lists all the closing tasks, their order of operation and responsible party. With this defined schedule the accounting team and whomever manages the business management systems can brainstorm for new workflows and automations. This Business Blueprinting process streamlines the close and slashes time and effort requirements.
7. Educate the Organization
Other departments do not feel the pain of month end lost like accounting. They often have no clue of the impact of their activities on the accounting department. With your detail defined closing schedule you can educate the entire organization so they understand the impacts of their action on closing. Sharing the process and requesting feedback creates a partnership mindset with other departments.
8. Continuously Improve the Financial Close Process
Continuous improvement is the hallmark of great organizations. The defined close process, shared with the organization, and post close debrief enables redesign and re-engineering. Improve by maintaining open dialogue, remain open to suggestions, and embrace change.
Take Action
Accountants by nature are risk averse. Change involves risk! However, doing nothing changes nothing. Ask your self the following questions:
- Can you benefit from streamlining your closing process?
- How many of the 8 tips have you implemented?
- Do you maintain multiple month end spreadsheets?
The most important step is defining your monthly close process. Identify your biggest opportunities for improvement. Assign responsibility and make change happen. If you need help, sign up for a Business Blueprint Discovery Call.