Financial Close Checklist: 12 Steps for an Accurate Month-End Close

To achieve a smooth financial close, it is important to know what needs to be done, who is responsible, and when each task is due. Using a financial close checklist helps everyone stay organized, from the first reconciliations to the final management reports.

Read Financial Consolidation: Definition, Challenges & Solutions

This guide explains 12 steps to help you organize your financial close and includes a template for tracking your progress. It also points out common causes of delays and offers tips to shorten the time between closing the books and reporting results.

A financial close checklist is a list of tasks your team completes at the end of each reporting period. It includes steps like journal entries, account reconciliations, consolidation, and financial reporting.

A checklist also helps teams coordinate their work. For example, group accounting needs approved numbers from each subsidiary before it can finish the consolidated results. The checklist shows these dependencies clearly and helps everyone plan their tasks.

The tasks on the checklist change depending on the reporting period. Month-end usually covers routine accounting and management reports, while quarter-end and year-end often include extra tax, audit, and statutory reporting requirements.

Begin with a calendar that lists each task, who is responsible, and the due date. Also, show how tasks depend on different teams.

For example, accounting needs the final inventory numbers before confirming the cost of goods sold. If warehouse reporting is late, it can delay the whole close process.

PwC suggests sharing closing schedules and cut-off dates ahead of time and setting standard steps for important closing tasks.

Make sure all relevant transactions are recorded in the right period. Pay special attention to late supplier invoices, goods received but not invoiced, and transactions close to the cut-off date.

If you work in manufacturing, also review production orders, material use, and warehouse transfers.

Match bank statements to general ledger balances. Look into any outstanding payments, deposits in transit, bank fees, or foreign exchange differences.

If your company operates in more than one country, reconcile each bank account and currency separately.

Match customer and supplier subledgers with the general ledger. Check for overdue invoices, unmatched payments, credit notes, and goods received but not yet invoiced.

Watch for large balances and transactions near month-end, since these can impact working capital and cash flow reports.

Inventory can greatly affect margins, especially in manufacturing and distribution. Review stock movements, production use, and inventory value before finalizing the cost of goods sold.

Also check for slow-moving or obsolete stock. Under IAS 2 Inventories, companies using IFRS measure inventory at the lower of cost and net realizable value.

Review expenses for the current month, even if the invoice comes in later. Also check prepaid costs and regular journal entries.

For example, a manufacturer might get its electricity bill after month-end, but the expense should be recorded in the month the electricity was used.

Check for new assets, disposals, depreciation, and capital projects. Make sure new equipment is recorded properly and depreciation starts when the asset is ready to use.

Next, review provisions. For example, if warranty claims change, you may need to update your estimates.

Compare transactions between group companies, such as sales, purchases, loans, and outstanding balances.

Look out for timing differences. If one subsidiary records a sale at month-end but the other records the purchase the next month, check delivery terms and documents. Then decide the right reporting period and agree on any needed adjustments.

Look for unusual balances, big manual entries, and unexpected changes compared to the previous month.

If operating expenses go up, it could be a real business change or a mistake in posting. Check the details before finalizing your results.

Gather approved results from each entity and use consistent account mappings, currency translations, and consolidation adjustments.

If subsidiaries use different ERP systems or local charts of accounts, make sure each account matches the correct group reporting category.

Compare actual results with your budget, forecast, and previous periods. Focus on material changes in revenue, gross margin, EBITDA, and cash flow.

If sales go up but gross margin drops, check raw material prices, production efficiency, and product mix to find out why.

Farseer’s DERP framework for variance analysis uses four steps: Define the variance, Explain its cause, Recommend an action, and Project the impact.

Gather the final financial statements, key KPIs, and variance notes. Make sure your management report highlights the numbers that matter most for business decisions.

Check that all needed reconciliations, adjustments, and approvals are done before sharing your results.

Use this sample five-day schedule as a starting point. Change the deadlines to fit your transaction volume, number of entities, and reporting needs.

The completion evidence column lists what your team must provide before marking a task as done.

Add a status column to track tasks as Pending, In Progress, or Complete. For multiple subsidiaries, assign local owners and set a common deadline for submitting approved results.

A checklist helps organize your team, but how data moves between departments is what really affects how quickly you can close the books.

Take the example of an FMCG manufacturer with three subsidiaries. The accounting teams finish their entries on time, but group reporting has to wait for final inventory numbers from one warehouse. Once those numbers come in, the team updates COGS, checks intercompany balances, and updates management reports.

Here are three ways to help fix these delays:

• Standardize reporting across entities. Agree on common account mappings, reporting formats, and data ownership so each entity submits comparable figures.
• Reduce manual data preparation. Identify the exports, reconciliations, and spreadsheet tasks your team repeats each month. Start with the tasks that take the most time.
• Connect the close to management reporting. Make approved actuals available for budget comparisons and forecasts with minimal manual work.

Track three metrics to see your progress: how many days it takes to finish the accounting close, how many days from close to management reporting, and how many post-close adjustments you make.

These measures help you see if delays happen during accounting, consolidation, or financial analysis.

The best software for you depends on which part of your process needs improvement.

Accounting close software helps with reconciliations, journal entries, and approvals. Consolidation software brings together results from different entities. FP&A software links approved actuals with budgets, forecasts, and management reports.

Before you invest, look at these four areas:

For example, if your accounting team closes the books on Day 4 but management reporting is only ready by Day 8, check how much of those four days are spent collecting data, preparing spreadsheets, and matching actuals with planning figures.

If these tasks cause most of the delay, it may help more to improve the connection between your ERP and FP&A system than to change your accounting close software.

For planning, forecasting, and reporting, Farseer brings financial and operational data together while working alongside your existing ERP.

Closing the books gives you a clear picture of past performance. Next, use those results to see what changed and update your plans.

Compare your actuals with your budget and forecast, look into big differences, and see how they affect costs, margins, and cash flow.

Begin by measuring how long it takes to close the books and how long it takes to prepare management reports. The difference between these two times will show you where to improve your process.