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The Importance of Reviewing Your Month-End Closing Process

Tulsa Accountant

As we wrap up another month, we wanted to note the importance of month-end closing procedures and how they impact business finances. Businesses that put into practice this type of accounting activity vary from large corporate multi-tax ID entities to mid-size companies. A month-end closing process is key to ensuring that you maintain consistent, accurate records throughout the year!

A month-end closing process is a process at the end of the calendar month where you “close the books” to your accounting transactions. In doing so, you gather a snapshot of all of the month’s activities, profits, and losses.

“The monthly accounting and bookkeeping closing process is important because it provides management with vital financial information. This process should be standardized by creating a list of standard journal entries to promote consistency between monthly closings.” (Chron)

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How Often Should You Conduct Month-End Closing Procedures?

This all depends on the complexity of your business. Some businesses have a better financial review if month-end procedures are done at the end of every month. Other businesses can extend that to once every quarter or even once per year!

Why Should Companies Employ This Practice?

It’s easy to lose sight of financial transactions within an organization, regardless of its size. Consider month-end closing procedures a great opportunity to pause and take stock of how the company is performing.

“These adjusting entries produce accurate financial books, which are the basis for correct financial statements.” (Chron)

Can a Business Owner Conduct Month-End Closing on Their Own?

Quickbooks, for example, facilitates a month-end close for business owners and makes it easy to record transactions for the non-accountant. However, it is important to note that the software is not a replacement for a professional accountant! An expert in this field uses accounting best practices that are carefully analyzed to ensure consistency and accuracy at all times. 

For example, there might be times when an account used, such as fixed assets, might need to be expensed rather than depreciated. Some of these adjustments are simply overlooked by accounting software such as Quickbooks, creating more work and frustration in the end.

Review Your Month-End Closing Process

As a business owner, you must take some time to regularly review your month-end closing process. A few of the questions that you must ask yourself include the following: 

  • Are you satisfied with how your month-end closing process is performing? 
  • Do you have concerns with how this process helps you gather a financial picture for your business? 
  • Are you confident that you are receiving an accurate and consistent report each month?

If you need further help with establishing a month-end closing process, or you have other accounting concerns, feel free to call us anytime for a free consultation. We are glad to offer Tulsa accounting help and advice.

LUXA Enterprises specializes in HR services, outsource accounting, bookkeeping, and payroll services. We match up with ideal candidates for services by allowing small to midsize businesses to increase focus on their growth through outsourcing. If you want to know how we can help you, contact us today!

REQUEST ONLINE PRESENTATION

We’ll demonstrate how you can save money while improving your efficiency and accuracy when you outsource your back office services to TEAM LUXA.
Let Us Present A Plan →
LUXA Enterprises download brochure

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