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Why month-end close is the key to unlocking insightful management information

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Simon Armstrong - Menzies Accountant

Simon Armstrong – Senior Outsourcing Manager

The key to insightful management information is that it is both accurate and timely. However, without an efficient month-end process, your management information may never be accurate or timely, so how can you make this a reality in your business?

First step: ‘Real-time’ bookkeeping

Your first target should be to undertake as near to ‘real-time’ bookkeeping as can be achieved with the resources available. Data entry and reconciliations should ideally be performed daily, most likely weekly for most businesses, but at the very least monthly. Use of current technology, such as data capture software (ReceiptBank / AutoEntry) and automatic bank feeds into your accounting software allows for much more timely information flow and real-time processing than ever before.


A Best-Practice Approach to Month-End

Work out your workflow

To achieve an efficient process, ideally each business should have their Month End Workflow mapped out, step-by-step, highlighting the potential bottlenecks. Tasks should be split into daily, weekly and monthly, and a review undertaken to identify what processes can be simplified using technology and automation.

Digitise your data collation

In most cases data collation is the key step in achieving efficiencies. This can be streamlined by going paperless – a digital approach allows a choice of methods to submit invoices (scan, email, apps), and expense management software (such as Expensify) allows improved control and monitoring of staff expenditure.

Standardising transaction coding

Implementing a tailored, well-defined chart of accounts is also important. This will also help achieve consistent and accurate coding of transactions (general ledger coding, vat coding, tracking/departmental coding). Optical Character Recognition (“OCR”) tools (such as ReceiptBank or AutoEntry) can automate most of the coding process – and allow ‘accounting by exception’ where you only need to look at the 5% of new or unique transactions, with the other 95% being coded automatically in line with prior treatment or established rules. This all drives efficiency and accuracy.

Process documentation and standardisation

Processes should be fully documented and incorporate internal controls such as segregation of duties, quality reviews and sense checks. Further, the standardisation of processes and procedures – across all departments, offices, teams and between colleagues – will generate efficiencies.

Communication and buy-in

To achieve success on this project, you and your finance team may need ‘buy-in’ from all departments within the business whose activities impact the financial results – such as sales team or stock controllers – so look to agree a timetable of information delivery that all parties are happy with.


An example of a typical month end close procedure

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So what could your new month-end routine look like? Well here are some example tasks to start you off or to cross-check against your current procedures.

Daily/Weekly Tasks

  • Do you record daily operational financial transactions?
  • Do you collect all relevant supporting financial documents?
  • Do you review accounts payable reports and arrange bill payments?
  • Do you review the aged receivables report and undertake credit control procedures as necessary?
  • Do you review transaction coding (nominal, VAT rates, etc)?
  • Do you publish receipts and invoices to the General Ledger?
  • Do you perform reconciliations (bank, credit card, cash, loans)?
  • Do you flag any queries or questions/missing information?

Month-End Tasks

  • Do you update stock / inventory value based on period end count, and post journals to reflect any wastage or obsolete stock?
  • Is there recognition of any newly purchased assets on the Fixed Asset Register?
  • Do you record monthly journal entries – payroll, accrued expenses, amortization, depreciation, accrued/deferred income, prepayments (using recurring journals within your accounting software)?
  • Do you reconcile Balance Sheet control accounts (net wages control / PAYE / VAT / etc)?
  • Do you reconcile all other Balance Sheet accounts (intercompany or directors’ loans, etc)?
  • Do you review revenue and expense accounts? Consider against comparative (prior month/prior quarter) figures – is accrued revenue being released consistently, has the insurance prepayment been released each month? Are there any expense items booked in the month which should be prepaid?
  • Do you review work undertaken – to catch errors and perform sense-check of results?
  • Do you ‘lock’ or ‘close’ the period – to prevent back-posting into periods already reported on?

Helping you achieve an effective month-end

This may sound like common sense to some people but taking time to step back to review your internal processes can be both financially and operationally invaluable.

Sometimes however, it can be difficult to accurately assess how to change the status quo and implement new best practice procedures. If this sounds like your business perhaps an independent systems review, supported by training and implementing best-practice procedures, will be of benefit.

Menzies Systems Advisory team can help you assess and implement a new, more efficient month-end close processes that in turn can help you obtain the timely and accurate management information that will aid your strategic business decisions.

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Simon Armstrong - FCA

Senior Manager

To find out how your could optimise your month-end processes to improve the flow of business information to you and your key stakeholders, contact Simon Armstrong or a member of our specialist Menzies Systems Advisory team.