BlackLine Home page BlackLine home page
Solutions
Solutions
Financial Close Management
Financial Close Management
Overview
Overview
Account Reconciliations
Account Reconciliations
Task Management
Task Management
Transaction Matching
Transaction Matching
Journal Entry
Journal Entry
Financial Reporting Analytics
Financial Reporting Analytics
Variance Analysis
Variance Analysis
Smart Close for SAP
Smart Close for SAP
Accounts Receivable Automation
Accounts Receivable Automation
Overview
Overview
Cash Application
Cash Application
Credit & Risk Management
Credit & Risk Management
Collections Management
Collections Management
Disputes & Deductions
Disputes & Deductions
Team & Task Management
Team & Task Management
AR Intelligence
AR Intelligence
Invoicing & Compliance
Invoicing & Compliance
Intercompany Financial Management
Intercompany Financial Management
Overview
Overview
Intercompany Non-Trade
Intercompany Non-Trade
Intercompany Balance & Resolve
Intercompany Balance & Resolve
Intercompany Net & Settle
Intercompany Net & Settle
By Organization Size
By Organization Size
Midsize Organizations
Midsize Organizations
Large Enterprises
Large Enterprises
By Industry
By Industry
Banking & Financial Services
Banking & Financial Services
Consumer Products & Services
Consumer Products & Services
Energy & Raw Materials
Energy & Raw Materials
Healthcare & Life Sciences
Healthcare & Life Sciences
Manufacturing
Manufacturing
Retail
Retail
Technology, Media & Communications
Technology, Media & Communications
See All Industries
By ERP
By ERP
SAP
SAP
Oracle
Oracle
Oracle NetSuite
Oracle NetSuite
Microsoft Dynamics
Microsoft Dynamics
See All ERPs
By Topic
By Topic
Environmental, Social, and Governance
Environmental, Social, and Governance
Recruiting & Retaining Top Talent
Recruiting & Retaining Top Talent
Enabling an ERP Transformation
Enabling an ERP Transformation
CFO & CIO Collaboration
CFO & CIO Collaboration
F&A Transformation
F&A Transformation
IPO Readiness
IPO Readiness
Mergers & Acquisitions
Mergers & Acquisitions
Revenue Cycle Optimization
Revenue Cycle Optimization
Regulatory Compliance
Regulatory Compliance
Customers
Customers
Customer Success
Success Stories
Success Stories
Community
Community
Services
Services
Overview
Overview
Professional Services
Professional Services
Training & Education
Training & Education
Customer Success
Customer Success
Transformation Services
Transformation Services
Global Support
Global Support
Resources
Resources
Events
Events
Upcoming Webinars
Upcoming Webinars
On-Demand Webinars
On-Demand Webinars
White Papers
White Papers
Blog
Blog
Accounting Glossary
Accounting Glossary
Developer Portal
Developer Portal
About
About
Company
Company
About BlackLine
About BlackLine
Leadership
Leadership
Diversity, Equity & Inclusion
Diversity, Equity & Inclusion
Environmental, Social & Governance
Environmental, Social & Governance
In the News
In the News
Press Releases
Press Releases
Investors
Investors
Awards & Recognition
Awards & Recognition
Careers
Careers
Partners
Partners
Consulting Alliances
Consulting Alliances
Solution Provider Partners
Solution Provider Partners
Software & Cloud Partners
Software & Cloud Partners
Business Process Outsourcers
Business Process Outsourcers
← Back to Glossary

Financial Close

What Is the Financial Close Process?

Financial close is a process where accounting and finance teams review and reduce account balances before the accounting cycle closes.

The process includes recording and reviewing journal entries for each transaction and activity, reconciling high-risk transactions, and validating the data through balance sheet review and account reconciliations.

When you think about a financial close, the point of all the preparation, review, and analysis is to deliver the financial statements. This reporting stage is where items on the SOX compliance list are checked off and financial statements are consolidated and produced.

This is the goal of the financial close and the last integral step in the process.

What Is the Difference Between Financial Close & Closing the Books?

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.

What Are the Steps to Financial Close?

While companies are all different, there are some key steps in the financial close process:

  1. Identify transactions and record them in a journal

  2. Post to the general ledger

  3. Prepare an unadjusted trial balance

  4. Reconcile debits and credits

  5. Create adjusting journal entries

  6. Run an adjusted trial balance and financial statements

  7. 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.

FAQ

What Are the Goals of Financial Close?

The goals of the financial close are to enter each new accounting period (whether that be month, quarter, or year) with temporary account balances at zero and to consolidate and produce the financial statements.

How long it takes to complete the financial close process depends on many variables, including but not limited to, how complex the company’s finances are, the size and experience of the accounting team, and whether the company uses accounting automation.

Companies that use automation solutions can perform financial close tasks throughout the fiscal period, while automating manual tasks that are the most time consuming, so they can close their books faster and complete the financial close process confidently.

What Are Some Challenges Around Financial Close?


Typically, the financial close process is performed manually, and accountants often spend long days and late nights on the tasks involved. There is a lot of pressure put on finance and accounting teams to complete their financial close on a tight deadline.

Challenges such as delays, incomplete data, complex data, lack of process, and lack of automation can make it difficult to complete the financial close. Companies that sacrifice speed over accuracy introduce a level of risk, as those that close within a short window often rely more heavily on estimates and accruals which may not be exact.

And, if the company is not validating the data, that may expose the company to risk with serious implications down the line.

BlackLine Smart Close

Request a demo with BlackLine and we will show you how BlackLine Smart Close can simplify, standardize, and automate your financial close.