Learn some of the best CFO tips and tricks to close the month easily and reliably. From checklists to software and partners, discover everything you need to make each month-end a breeze.
You know It’s the year-end close when your finance team is drowning in paperwork by 8 am and surrounded by pizza boxes by 6 pm. Month-end close might not be as high stakes as year-end, but it’s still a frazzling experience for finance teams who can easily be overwhelmed without the right processes, tools, and software.
So, what happens during a month-end close? Finance teams must reconcile all balances and report the month’s performance to the board of directors by gathering information from multiple teams — a time-consuming practice.
A good month-end close cadence will help year-close become easier and give the business a clearer view of business health and operating profit. With better spend control, the business can make better decisions on marketing, hiring, new business strategy, or operational design.
Download our guide, CFO tips to close the month to learn how to close your month faster and more efficiently.
The month-end close involves gathering information, reviewing, and reconciling statements. The business will aim to complete it by the first few days of each month.
It tells the company what profits have been made. And, because of this process, a business can find out if its targets have been met, which can in turn cascade a lot of critical decisions. Creating a new role, leasing a new office, pay reviews, bonuses, and much more can depend on having this information. And inaccuracies can be a disaster.
Most finance teams close each month, precisely because it reduces accounting mistakes and because it allows businesses to behave nimbly in their decision-making. This is even more important in the volatile market we’ve found ourselves in over the last few years.
The good news is that according to CFOs and other finance leaders the month-end close can be as hard or as easy as you make it. Planning and good processes including a nicely organised month-end close checklist, can convert a monthly struggle to a relative breeze and a happy CEO (although that depends on the performance too, of course).
To keep the accounts clean and tidy each month is a choice that finance teams make (and most do). Closing the books every month can feel like a lot of work. But, there are ways to make it easier, including the use of spend management tools in the form of company cards and supporting expense management software.
These are some of the benefits of closing each month:
This means that all company directors have a good understanding of the status and health of the company on a regular basis.
Gone are the days of yearly planning and budgeting. Most departments are having to react to big, meaningful changes at various times in the year, which means accurate financial records are vital.
By closing the books every month-end you will be ready for audits and have tax returns every month.
Each month, senior management needs to discuss the success of operations with data-driven facts. The company will get timely feedback on the impact of any new initiatives. Unless the company has accurate records on profit for each month (and extra metrics such as revenue per person), there is no feedback to the company.
To help you stay organised and move quickly through all tasks, we’ve compiled a list of items that most CFOs and finance teams go through to close the month.
Ultimately, the process will be unique to your organisation, so you need to work with your team to create a checklist that will be specifically helpful to your company during month-end close.
In our ebook, CFO tips and tricks to close the year like a pro,, we interviewed CFOs from various industries to compile an informative checklist from those that know it best.
Once you’ve adapted this list, discuss with your team members to allocate tasks. You could consider a simple project management tool, such as Trello, or whatever your company is already using. This way you can keep track of how each item is crossed off or where you are being blocked.
You will already know that closing the month is hardly a one-person task. Everyone in the finance team is required to help as well as close relationships with other directors and department heads.
Book recurring meetings with your team as the end of the month approaches, and be aware of potential holidays that could decrease your capacity. Distribute tasks amongst your team.
Then, organise meetings with budget owners to go over all the costs that will make it to the Profit and Loss sheet.
Lastly, you will need to make sure that employees have submitted expenses. Unless you have time-saving, automated expense management software that makes that happen in real-time.
How tough will it be to gather the information? Well, this is proportionally related to the sophistication of your software stack. CFOs with a well-implemented expense management solution breeze through this step, while companies relying on more manual processes can struggle at this point.
An innovative fintech spend management solution can make all the difference when it comes to automating manual finance admin, automatically transferring data for reconciliation, and chasing any missing info. Take Essentia Analytics for example, when they moved their cards and expense management to Payhawk they halved the time it took to close their month from ten days to five.
"Something we've learned from Payhawk? Month-end close doesn't have to take ten days!"
Use your expense management software to automatically check all invoices that have gone out and are due. And see what hasn’t been paid so you can chase. Also, check that what has been paid is the right amount.
Reconcile and check all due invoices have been paid. You will also need to track all the costs to the company whether it’s from expense reports, invoices, or company cards.
At this point, you could make a final call for expenses across the organisation or if you have smart spend management software from a company like Payhawk, this will be done automatically.
Budget accuracy is essential for companies, and the month-end close is the ideal process to keep tabs on it.
Because all budgeting is essentially a projection, regularly reviewing this means budgets can be redeployed in other areas, if not spent. Conversely, red flags need to be raised if overspend is coming from any department in the business.
You might not choose to do this every month, but it pays to include this on the checklist, especially if your company owns a lot of assets that depreciate quickly.
Review fixed assets to the company and account for their depreciation as a cost. Equally, conduct an inventory count to understand what value is left. By recording these changes and spreading these depreciation costs throughout the year, you avoid sudden losses of profit.
Strategic financial planning needs accurate reports, P&L and balance sheets.
Through the month-end close, you will need to update these key documents.
The business ledger and financial statements like P&L statements and the balance sheet are the big deliverables for the closing period. Executives need these reports to stay informed on business performance and use them as the basis to make major decisions for the next fiscal period. Make sure they’re accurate, so your company’s strategic financial planning is built on healthy foundations.
Closing the month can be a headache for many companies, but it doesn’t need to be. Consider the medium-to-long term solutions that can simplify, automate and digitise tasks to decrease your reliance on manual processes.
Conduct a retrospective across your team to identify the hardest elements in the month-end close. Is it the gathering of information? The budget adjustments? Is it the technology at fault? Or are the humans behind it? A retrospective can help you nail down the aspects of the process most susceptible to improvement, and as a side bonus, can feel like therapy to your team.
Depending on the size of your business, you'll likely have some kind of variation on a mix of internal accountancy, external accounting support, bookkeeping software, and/or ERP accounting tool. The actual machine and cogs of your finance function depend entirely on the size of your business and its needs. But either way, you will need it to run smoothly to close your month on time. Ideally, you will also work with a spend management provider (who offers both company cards and expense management software) that integrates with the best ERPS for your business size.
Most CFOs we spoke to for the guide, CFO tips, and tricks to close the year like a pro, have an accounting firm in charge of tax returns.
Having a reliable accounting firm or tax consultant means you can count on specialised help if you either don't have it covered internally or don't have the time for it in your current setup.
Review the current systems in place and how they compare to what’s available in the market. If you’re still sifting through bank statements at the end of the month and deciphering outdated expense reports manually compiled, it’s time to consider all-in-one finance software to simplify your spending.
Most companies have by now invested or are looking to invest in an ERP to bring together disparate teams and data sources in the business.
ERP is the metaphorical glue that brings together all the individual systems in a larger organisation. With ERP software each department still enjoys its own system, but all are connected and can be accessed via one interface, granting crucial access to company directors with real-time data.
In a recent survey, it was determined that accounting was by far the most critical function with 89% of respondents investing in an ERP system. The most important features included the general ledger (GL), accounts receivable (AR), accounts payable (AP), budgeting, and financial reporting.
Payhawk all-in-one finance software bringing together Visa credit cards, expense management, reimbursements, subscription management, and integrations can help you speed up and simplify your month-end close. Here are some of the ways in which it can help your organisation.
Payhawk makes it really easy to give out virtual company credit cards to anyone in your team. Combined with spending limits and total visibility, this is not only a better way to manage to spend and empower your employees, but this will also keep you much better organised on a daily basis.
No more chasing employees for submitting claims. You will have total visibility of each team’s spend while employees will find it easy to submit a matching receipt or invoice to every cost.
Reconciling and matching invoices to transactions can be arduous and often steal finance teams from the time that should be put towards strategic planning.
With a little investing in finance software, these tasks can be automated and integrated with your current bookkeeping tools. For example with our Visa company cards, the mobile app will allow each cardholder to submit receipts to the transactions, even paper receipts (thanks to OCR technology that snaps and notes down the information as if by magic).
Payhawk also has automated reminders sent to cardholders for any missing paperwork, so the finance team can stop being the bad guys.
With remote work on the rise, bringing all your finance processes to the cloud can accelerate the time to complete the month-end close.
Companies are increasingly relying on monthly subscriptions to SaaS companies to get more done. However, these subscriptions can get out of control rather quickly.
This is why we have now released a specific feature bringing all your subscriptions under one roof, letting you know of upcoming renewals and alerting you of redundant subscriptions.
Consider the amount of time and energy that goes into closing the month, and how important it is to do it properly. Wouldn’t a little help from software make all the difference?
Book a demo today to learn how Payhawk’s features can optimise your month-end close in just a matter of clicks.
An integral part of Payhawk's inception, Raquel has seamlessly transitioned through various roles, beginning in sales and pioneering the customer success team. Her journey continued into content and product marketing, where she now excels as a Product Marketing Manager. Despite managing two maternity leaves, Raquel's vibrant spirit thrives outdoors, embracing activities like hiking, cycling, global travel, and creating cherished moments with her two children.