The financial close process is the structured sequence of accounting tasks—including reconciliations, journal entries, intercompany eliminations, and financial statement preparation—that finance teams complete at the end of each reporting period to produce accurate, auditable financial results.
A typical close involves:
-Reconciling all balance sheet accounts
-Posting and reviewing journal entries
-Eliminating intercompany transactions
-Consolidating results across entities
-Generating financial statements for reporting
BlackLine automates and centralizes each stage of this process, reducing close time by up to 70% while maintaining full audit traceability.
While many people will use the terms financial close and closing the books interchangeably, it’s important to understand the difference.
Financial close refers to all the financial and accounting processes that occur on a regular basis in a business leading up to, and including, closing the books on the prior month, quarter, or year. So, closing the books is just one part of the financial close.
While companies are all different, there are some key steps in the financial close process:
Identify transactions and record them in a journal
Post to the general ledger
Prepare an unadjusted trial balance
Reconcile debits and credits
Create adjusting journal entries
Run an adjusted trial balance and financial statements
Close the books and generate financial reports
The financial statements generated from the financial close are used by company management for analysis, comparisons, KPI generation, and other assessments of the business’s financial health.
Investors, lenders, and regulatory agencies may also use these statements—depending on the company, it may be required to provide these statements to those stakeholders.