The financial close process is a critical stage in the accounting cycle and requires the completion of several tasks to ensure accurate financial statements. A financial close process checklist helps in tracking the completion of various activities and ensures that no important tasks are left out. With this in mind, let’s discuss the financial close process, review an applicable checklist, and check out challenges and best practices involved in this arena.

What is the Financial Close Process?

The financial close process requires the recording of all of an organization’s financial activities over a specified period of time. This process takes place at regular intervals, usually occurring at month-, quarter-, or year-end. When these periods are completed, financial statements are triggered, which can then be compiled and analyzed to show an accurate depiction of the company’s financial health.

Financial Close Process Checklist

The financial close process can be a lengthy one, largely because both employees and outside stakeholders are relying on the information that’s produced from the activities involved, making it essential for those responsible for financial close to do so carefully and with an eye for detail.

The outcome of the information obtained from the financial close process helps business leaders create key performance indicators (KPIs) and compare their own financials against those of their competitors. It’s during this process that budgets and forecasted expenditures are reviewed and adjusted as needed.

With this, there are 10 main steps included in our financial close process checklist:

1. Reconcile Balance Sheet Accounts

You need to make sure all finances are accounted for, including cash, checking and savings accounts, credit cards, and prepaid accounts. During this phase, accountants will cross-reference statements with receipts, banks records, and any other available resources.

In order to ensure the balance sheets are accurate, accountants much document all income and expected dollars, as well as update accounts payable systems to ensure all expenses that were incurred during that period are recorded.

2. Review and Approve Journal Entries

The review period doesn’t only encompass the current period that’s just been recorded; your accountants should also be checking in with balances and adjustments from the prior period.

3. Perform Account Analysis and Resolution of Variances

Now it’s time to dig into the data and figure out why any variances exist. Every variance should be accounted for and be corrected so the books balance.

4. Calculate and Record Accruals and Deferrals

The general ledger includes raw accounting entries that record all of a company’s transactions. As the accounting team dives into the financial close process, team members will post depreciation, amortization or other expenses and revenue—including deferrals and accruals—to ensure the accuracy of all records.

5. Complete and Review Bank Reconciliation Statements

With all this information compiled and analyzed, the accounting team will now review and reconcile bank statements, charge accounts, prepaid accounts, fixed assets, deferred revenue accounts, and inventory.

6. Prepare and Review Intercompany Transactions

For companies that have intercompany transactions, compliance with local tax codes, regulations, and accounting rules can add a layer of difficulty, but the process is necessary. When accountants prepare and review intercompany transactions, they ensure A/P and A/R correlate between assorted company departments.

7. Close Subledger Systems

Subledgers contain a detailed subset of information that’s ultimately reported in the general ledger. Once the details of specific types of transactions are known, these subledgers can be closed, inching the team one step closer to a successful financial close process.

8. Prepare and Review Financial Statements

Once accountants have all of the information they need, it’s time to prepare the reports and send them down the line to be reviewed by management. During this phase, the team might also need to gather any documentation necessary for audits or regulatory reporting.

9. Review and Approve Tax Returns

Before any books can be closed, the accounting staff will run financial statements and any related tax returns, which will need to be reviewed, approved, and processed accordingly.

10. Conduct a Final Review and Sign-Off of Financial Statements

Once the reports have been thoroughly reviewed by all applicable team members, it’s time for one final review and a sign-off of the financial statements. This, of course, lends itself to the books resetting back to nothing and the accounting team getting ready for the subsequent close period.

Challenges in the Financial Close Process

Never mind the fact that accountants and financial professionals are tasked with a lot of work in their day-to-day roles, the financial close process can put an extra burden on these employees. Standing out above all of these difficulties is the limited time in which employees have to gather, analyze, and report on the necessary information. The financial close process is, by nature, a very time-sensitive endeavor, and staff often struggles to complete all of the required tasks within a limited time frame.

Beyond that, there’s often a lack of standardization, meaning different departments may have different processes. This issue generally leads to inconsistencies and errors during the close process.

Other Challenges include:

  • Data inaccuracy. Inaccurate data or missing information can cause significant delays and errors in the close process;
  • Dependence on manual processes. Reliance on manual processes increases the risk of mistakes and interruptions.
  • Lack of visibility. Limited visibility into the close process can lead to missed tasks and poor decision making.

Best Practices for a Smooth Financial Close

Despite the aforementioned challenges associated with the financial close process, it’s a part of business that isn’t going anywhere, so it only makes sense to harness best practices to make the most of your team’s time and energy.


Automating manual tasks and processes can save time and reduce the risk of errors.


Implement standardized processes across departments to ensure consistency and accuracy throughout your organization.

Ensure Accurate Data

Regularly review and clean data to ensure it’s accurate at all times, rather than leaving the accounting team to deal with messy information when financial close comes knocking.


Encouraging collaboration and communication between departments can reduce the risk of missed tasks.

Close Better With NetSuite and MIBAR

Accounting teams that are tired of chasing down information, manually entering and re-entering data, and wrangling with spreadsheets every month can take advantage of enterprise tools that remove many of the headaches involved in the financial close process.

For example, NetSuite automates much of the financial close process, which eliminates major pain points and also helps to increase the timeliness and accuracy of financial reporting. The accounting team can manage revenue recognition, depreciation and other key accounting procedures within a single system, improving access to the data they need, as well as facilitating the flow of financial information across the organization. In addition real-time dashboards provide up-to-date financial information to inform business strategies.

Contact the experts at MIBAR today to improve your financial close process!

Additional Resources

Top Benefits of Accounts Receivable (AR) Automation

How to Fix Messy Financial Data

Eight Repetitive Steps and How to Automate the Accounting Cycle