Month-End Close

What Is the Month-End Close?

The month-end close is an accounting procedure that finalizes all financial activities for a business for the previous month. This process marks the end of a defined accounting period.

The process involves reviewing, documenting, and reconciling all transactions. It ensures that all transactions are properly accounted for, allowing the business to close the books and start a new period with fresh records.

The monthly close process is an integral function that helps a business provide accurate financial data on a regular basis. Reviewing and reconciling account information supports business evaluation and strategic planning. It helps catch errors before they become costly and helps evaluate the company’s financial well-being.

Performing a month-end close builds confidence in the financial data used to prepare financial statements and supports sound business decisions.

Flowchart for Month-End Close Process

Here is a month-end close process flowchart to visualize some of the key steps and processes.

BlackLine month end flowchart

How Is a Month-End Close Performed?

The close process involves several steps. The accounting team reviews, records, and reconciles all account information to confirm accuracy. Using account reconciliation software can streamline this process, reducing errors and saving time. Consistent journal entries of all transactions impacting financial records help avoid delays. All departments should follow similar procedures and utilize a sound basis of accounting, such as Generally Accepted Accounting Principles (GAAP), to maintain consistency.

One of the primary steps is to reconcile subsidiary ledgers with the general ledger. Recurring monthly transactions must be recorded, including accrued expenses, amortization, and depreciation.

The team reconciles cash accounts and the balance sheet. They review income and expenses. Finally, they prepare financial statements. Once all accounts are reconciled and reviewed, the accounting period is closed.

What Are the Steps in the Closing Process?

All companies are different but there are some common steps in closing the month-end books including:

  • Record all incoming cash and accounts receivable

  • Review accounts payable and expense records

  • Reconcile accounts

  • Review fixed assets

  • Conduct an inventory count

  • Collect and review financial documents

  • Prepare financial statements

  • Review all information for accuracy

The process will vary depending on your organization’s needs. Businesses that sell physical products will have the extra steps of tracking inventory while companies that are service-focused will not. Smaller companies may have fewer accounts while multinationals will have hundreds or thousands.

What Information Does Accounting Need for Month-End Close?

Here is a list of common information accounting teams need to have on hand to close the monthly books:

  • Total revenue numbers

  • Bank account information

  • Inventory levels (if applicable)

  • Petty cash total

  • Financial statements

  • Balance sheets

  • Total fixed assets

  • Income and expense accounts

  • General ledger

Frequently Asked Questions

A consistently executed month-end close ensures the reliability of financial data. This process supports management reviews and strategic business decisions while accurately reflecting the company's financial status for investors, lenders, auditors, and tax agencies. Reliable financial reporting depends on the precise information generated during this period.

Each company is different, so it’s impossible to say how long your month-end close should take. Surveys and research over the years show the month-end process generally takes between five and 10 days.


The amount of time it takes to complete the process will depend on several factors including the size of the company, the volume and complexity of transactions that need to be recorded and reconciled, and the accounting systems that are used.


Some activities can be recorded or reconciled more frequently than monthly to help speed up the process at month’s end.


Accounting teams face a lot of pressure to close the books fast because executives use the previous month’s financials to make business decisions for the upcoming months and quarters.


Ventana Research notes, “Closing faster has value: 62% of those that close within six days say that the information they provide is timely, while only 39% of those that take longer say that.”


However, closing faster can mean a tradeoff between speed and accuracy.


For example, using estimates rather than actuals can shave hours or days off your close, but that means your numbers may not be exact, and when it’s time to close the fiscal year, the actuals will still need to be determined. This may end up adding days to your year-end close.

Extra time spent on the month-end close means less time for value-added analysis and collaboration with other departments.

Optimizing the month-end close will get financial numbers into the hands of leadership sooner to assist with timely analyses and smarter decision-making. Other reasons to optimize include better discipline, more structure, improved controls, more visibility, and reduced risk.

Manual processes remain one of the primary culprits, as they increase the risk of errors and consume significant amounts of time. Implementing account reconciliation software can address these challenges by automating reconciliation tasks, centralizing data, and improving accuracy.


Additionally, some challenges finance and accounting teams encounter when performing a manual close process include:


Team members don’t know what needs to be done and/or what is already completed

  • Inaccurate or incomplete data

  • Lack of standardization

  • Processes that are not clearly defined

  • Discrepancies between numbers

  • Delayed reconciliations due to errors, adjustments, and reclassifications

  • Lack of real-time data that results in little or no visibility and transparency

Implementing these best practices can help address common month-end close challenges.

  • Conduct Pre-Close and Post-Close Meetings: Meet with team members to discuss schedules, assign responsibilities, and resolve bottlenecks.

  • Manage Time and Communicate Efficiently: Understand schedules to work toward an ideal close date.

  • Build Relationships: Build relationships across departments so they provide financial data on time.

  • Take Advantage of Accounting Automation: Replace repetitive manual work with automation to centralize data and enhance visibility.

BlackLine is a leading platform helping finance teams make the move to modern accounting. Our solutions seamlessly integrate with leading ERP systems to unify data and processes, unlock global visibility, automate repetitive work, and deliver real-time information.

BlackLine’s secure, cloud-based platform addresses financial close & consolidation, ensuring compliance and scalability so teams can shift their focus to strategic work. Get your complimentary copy of Modernizing Accounting For Dummies to discover how to eliminate inefficient tasks.