Month-End Close

During the month, transactions are recorded as they happen. At month-end, the finance team makes sure everything is complete and correct before producing reports.

Typical tasks include recording accruals for expenses incurred but not yet invoiced, recognising revenue earned, booking depreciation, reconciling bank accounts and key balance sheet accounts, matching intercompany balances, reviewing unusual items and preparing management accounts.

For example, a company receives an electricity bill for March only in April. During the March close, the finance team records an estimated accrual for March electricity so that the month's costs are complete.

Many businesses aim to close their books within a few working days of month-end. A faster close gives managers timely information for decisions. Automation, standard checklists and continuous reconciliation during the month help speed up the process. The month-end close is a smaller, more frequent version of the year-end close, which includes additional work for the annual financial statements and audit.