Monthly Financial Close Process
End-to-end month-end financial closing procedure covering journal entries, reconciliations, accruals, and management reporting.
Purpose
Produce accurate, timely monthly financial statements by following a consistent close process with clear deadlines and verification steps.
Steps (7)
Pre-Close Preparation
Send deadline reminders for expense reports and vendor invoices. Verify revenue is recorded for the period. Confirm bank feeds are current. Create the close checklist with deadlines.
Checklist
- Expense report deadline communicated
- Pending vendor invoices followed up
- Revenue recognition reviewed
- Bank feeds imported through end of month
- Credit card transactions downloaded
- Month-end close checklist created with deadlines
Expected Output
Pre-close reminders sent. Transaction feeds current. Close checklist ready.
Record Revenue & Receivables
Finalize all revenue entries. Post deferred revenue adjustments. Review AR aging. Record bad debt allowances. Reconcile AR sub-ledger to GL.
Checklist
- All customer invoices issued
- Revenue recognized per company policy
- Deferred revenue entries posted
- AR aging report reviewed
- Bad debt allowance adjusted
- AR sub-ledger reconciled to GL
Expected Output
Revenue finalized. AR reconciled to GL.
Record Expenses & Payables
Enter all vendor invoices. Process approved expense reports. Record accruals for known expenses without invoices. Reconcile AP sub-ledger to GL.
Checklist
- All vendor invoices entered
- Invoice coding reviewed
- Approved expense reports processed
- Expense accruals recorded
- Prepaid expense amortization posted
- AP sub-ledger reconciled to GL
Expected Output
Expenses and accruals recorded. AP reconciled to GL.
Payroll & Benefits Reconciliation
Verify payroll is fully processed and posted. Calculate payroll accruals for partial pay periods. Reconcile payroll register to GL accounts.
Checklist
- Monthly payroll verified
- Payroll accrual calculated for partial periods
- Payroll register reconciled to GL
- Employer payroll taxes reconciled
- Benefits deductions reconciled
- PTO/vacation accrual updated
Expected Output
Payroll fully reconciled. Accruals posted.
Bank & Cash Reconciliation
Reconcile every bank account and credit card to the GL. Identify outstanding checks, deposits in transit, and bank fees. Investigate reconciling items older than 30 days.
Checklist
- Each bank account reconciled (statement vs. GL)
- Outstanding checks identified
- Deposits in transit identified
- Bank fees and interest recorded
- Stale outstanding checks flagged
- Credit card statements reconciled
- Bank reconciliation signed off
Expected Output
All bank and credit card accounts reconciled.
Journal Entries & Adjustments
Post all remaining month-end entries: depreciation, amortization, interest, intercompany entries, and reclassifications. Run trial balance after all entries are posted.
Checklist
- Depreciation entries posted
- Amortization entries posted
- Interest expense/income recorded
- Intercompany entries balanced
- Reclassification entries posted with justification
- All entries have supporting documentation
- Trial balance generated — debits equal credits
Expected Output
All month-end journal entries posted. Trial balance in balance.
Financial Statements & Management Review
Generate Income Statement, Balance Sheet, and Cash Flow Statement. Perform variance analysis (month-over-month and budget-to-actual). Prepare the management reporting package.
Checklist
- Income Statement generated and reviewed
- Balance Sheet generated and reviewed
- Month-over-month variance analysis completed
- Budget-to-actual variance analysis completed
- Significant variances investigated and documented
- Management commentary written
- Financial package reviewed by Controller/CFO
- Reporting period closed in accounting system
Expected Output
Monthly financial statements produced and distributed. Close process completed.