Month-End Reporting: The Ultimate Guide

By Linda RoperAugust 11, 2022
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Financial statements are one of the most important strategic tools for any business. They assist companies in measuring progress toward key objectives and are crucial for producing an accurate cash flow forecast to make the most informed business decisions.

Calendar with a circled around 31 for month-end reporting

In order to reap the most success from your financial statements, however, you must get into the habit of regularly closing your books with month-end reporting.

If you’ve ever wondered, “what are month-end reports?”, don’t fret. In this guide, we’ll teach you everything you need to know about the month-end reporting process.

Table of Contents

What is Month-End Closing and Reporting?

For all businesses, the most critical closing period is at the end of the financial year. However, efficient financial management is something that should be practiced as regularly as possible.

Because of this, the majority of finance teams also close the books at the end of each month, enabling them to review transactions, journals, and reports more often.

Producing a month-end report therefore allows you to keep your accounting statements accurate and up to date. Your ledger is also adjusted for monthly transactions by the month-end report. This involves documenting loan payments, taking depreciation into account when valuing firm assets, eliminating any bad debts, and making entries for prepaid costs.

Reviewing the previous month's transactions to ensure that everything has been accurately recorded is another purpose for the month-end report. If your accounts don't balance, the month-end report gives you an opportunity to fix any accounting mistakes.

What are the Benefits of Month-End Reporting?

Month-end reporting generates accurate balance sheets, which are the best strategy for understanding a business's financial situation. When performed consistently each month, your company's earnings will be precisely reconciled compared to its outgoing costs. In addition to precise reconciliation of your company's earnings and spending, month-end reporting assures an organisation's compliance with both internal and external regulatory and financial standards.

Additionally, it enables the essential monitoring of internal finances to swiftly spot inconsistencies, such when a supplier has suddenly raised its prices or more serious matters such as fraud.

Finance team working on the month-end reporting

Who Creates Financial Month-End Reports and Who Reads it?

A company’s finance or accounting team are responsible for undertaking the month-end close process, as well as creating the financial month-end reports. The CFO, or Chief Financial Officer, may also play a large role in this procedure.

The month-end report is then read by the executive team to determine how the company is progressing financially, as well as in what direction it is headed.

Generally speaking, the report should be concise so that the management team doesn't have to spend a whole day reading it, yet informative enough to include the most crucial information for making important business decisions.

What Should be Included in a Month-End Financial Report?

Every organisation is different, and what works for a large company may not work for a small business. However, in general, you'll need the following components to complete a month-end report:

  • Total revenues

  • Bank account details

  • Inventory levels

  • Amount in the petty cash fund

  • Balance sheets

  • Financial statements

  • Total fixed assets

  • Income and expenses information

  • General ledger data

The Step-by-Step Month-End Reporting Process

The Step-by-Step Month-End Reporting Process

The month-end reporting process contains 4 key steps: recording, closing, analysing, and reporting. We’ve described each step in more detail below.

1. Record

  • Check that all revenue and expense activities have been entered into the enterprise resource planning (ERP) software

  • Record payroll, employee vacation, notes payable interest expenditure, taxes, and any other accrued liabilities

  • Check fixed assets and do an inventory count

  • Create depreciation and amortisation journal entries

2. Close

  • Reconcile your credit card accounts, checking and savings accounts, petty cash fund, and prepaid accounts

  • Verify the consistency of both companies' payables and receivables by reconciling intercompany accounts

3. Analyse

  • Draft an adjusted trial balance, an income statement, a balance sheet, and aging reports for accounts receivable and payable

  • Go over the analysis with relevant stakeholders

4. Report

  • Prepare management, financial planning and analysis, and external reports

  • Assemble the necessary information for in-company and outside auditors

This month-end procedure might take between 5 and 10 days, depending on the efficiency of your accounting team.

Tips for Greater Efficiency During Month-End Reporting

As you’ve already learned, month-end reporting is a vital process within any business. However, it’s also one which can be streamlined for maximum efficiency. Here are our top 5 tips to help you achieve this.

1. Back Up Your Important Data

By now, all businesses should have switched their paper-based accounting methods to digital and online ones. If you haven’t already made the digital transformation in your business, we run you through the process in this blog post.

Even if you already use online or digital accounting software, it's crucial to back up all of your documentation. Besides, no one wants to lose access to their important data, reporting, and analysis. If this were to happen, it would prolong the entire month-end procedure and have a domino effect on other accounting operations. Therefore, back up your financial data using a dependable cloud-based solution that will also keep it secure.

2. Meet with Your Team

Bring your team together for a pre-close meeting to go over your schedule and deadline. Make sure everyone is aware of the tasks they'll be responsible for. This is also an excellent opportunity to address any challenges that occurred at last month's closing and, if necessary, devise a plan for avoiding them.

3. Utilise Helpful Software

You should also use third-party tools and software to automate the process as much as you can. Many of the time-consuming and manual month-end closing procedures can be streamlined using technology. Therefore, take advantage of tools that assist with collecting any of the relevant data for your month-end reporting. Expense management software is one such example.

How ExpenseIn Can Help with Your Month-End Reporting

Cloud-based expense management software, like ExpenseIn, keeps all of your company’s expense information in a single, secure, and easily accessible location. It also allows you to access and utilise real-time expense reports to make smarter decisions – something which is invaluable come month-end reporting.