Aug 11, 2022
8 mins read

The month-end close checklist for finance teams

CFO reading our month-end close checklist for finance teams
Quick summary

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.

Table of Contents

    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.

    l visibility of each team’s spend, while employees will find it easy to submit a matching receipt or invoice for every cost.

    Automating manual processes

    Automated reconciliation transforms the arduous task of matching invoices to transactions, freeing finance teams to focus on strategic planning instead of getting bogged down in manual processes.

    With a little investing in finance software, these tasks can be automated and integrated with your current bookkeeping tools. For example, with our Visa corporate 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 sends automated reminders to cardholders for any missing paperwork, so the finance team can stop being the bad guys.

    Getting on the cloud

    With remote work on the rise, bringing all your finance processes to the cloud can accelerate the time to complete the month-end close.

    Get a simple view of your monthly subscriptions

    Companies increasingly rely 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 how much time and energy 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 optimize your month-end close in just a few clicks.

    See how Essentia Analytics halved their month-end close

    What is a month-end close?

    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.

    Why?

    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, paying 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 organized month-end close checklist, can convert a monthly struggle into a relative breeze and a happy CEO (although that depends on the performance too).

    This is why we have written this article, so you can use it as a checklist to guide you through the process.

    Why close the books each month? What are the benefits?

    Keeping 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 using spend management tools in the form of company cards and supporting expense management software.

    These are some of the benefits of closing each month:

    It gives you accurate and current financial records across the year

    This means that all company directors have a good understanding of the status and health of the company regularly.

    Enables timely and informed decision-making

    Gone are the days of yearly planning and budgeting. Most departments have to react to big, meaningful changes at various times in the year, which means accurate financial records are vital.

    Streamlines tax returns and audits

    By closing the books every month-end, you will be ready for audits and have monthly tax returns.

    Highlights areas for improvement in the business operations

    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 of profit for each month (and extra metrics such as revenue per person), there is no feedback to the company.

    The month-end close checklist for finance teams

    To help you stay organized 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.

    Create a checklist for your business

    Ultimately, the process will be unique to your organization, so you need to work with your team to create a checklist that will be specifically helpful to your company during the 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 track how each item is crossed off or where you are being blocked.

    Gather your team and all the information

    You will already know that closing the month is hardly a one-person task. Everyone in the finance team is required to help and 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, organize meetings with budget owners to review 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.

    Reconcile accounts receivable

    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.

    Review accounts payable

    Reconcile and check all due invoices have been paid. You will also need to track all the costs to the company, whether from expense reports, invoices, or company cards.

    At this point, you could make a final call for expenses across the organization. This will be done automatically if you have smart spend management software from a company like Payhawk.

    Review the budget and make necessary adjustments

    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.

    Review fixed assets and perform an inventory count

    You might not choose to do this every month, but it pays to include this on the checklist, especially if your company owns many 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 profit losses.

    Prepare financial reports and update financial documents

    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. Ensure they’re accurate so your company’s strategic financial planning is built on healthy foundations.

    How to make month-end close easier each time

    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 digitize tasks to decrease your reliance on manual processes.

    Retrospective

    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.

    Consider external help

    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 specialized help if you don't have it covered internally or don't have the time for it in your current setup.

    Review your finance stack

    Review the current systems 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.

    Consider investing in an ERP system if you haven’t yet

    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 combines all the individual systems in a larger organization. With ERP software integrations, 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.

    A recent survey 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.

    How Payhawk can help you optimize your month-end close checklist process

    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 organization.

    Decrease the number of expenses in your report with unlimited virtual Visa cards.

    Payhawk makes it easy to give out virtual company credit cards to anyone on your team. Combined with spending limits and total visibility, this is not only a better way to manage spending and empower your employees, but this will also keep you much better organized daily.

    No more chasing employees for submitting claims. You will have tota

    Raquel Orejas - Product Marketing Manager at Payhawk, a Spend Management solution
    Raquel Orejas
    Product Marketing Manager
    LinkedIn

    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.

    See all articles by Raquel →
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