How to prepare the perfect year-end close [3 tips + a checklist]

When the year-end close approaches, accounting teams are often forced to rush through their close processes, leaving themselves and auditors little time to do a proper review of financial statements.  

Ultimately, chaotic closes make consolidating and preparing informative and compliant financial statements much harder.

So you may wonder if there’s a secret to making your year-end close process clean, easy, and worry-free.  

Turns out there is.

The secret is to stay on top of the month-end close. This requires planning and consistency each month, but it pays off in the end. (And with automation, the month-end close can be a breeze.)  

In this post, we provide three tips and a checklist to help pave way for your smoothest year-end close yet.  

1. Start with a standardized month-end close

A successful month-end close will set the stage for your quarterly and annual close. If your process is lengthy and disjointed, you can expect the same for year-end.  

But the month-end close doesn’t have to be something your team dreads. With the right processes and solutions in place, you can turn it into an efficient process that is free of stress and manual errors.  

Follow these best practices for successful monthly closes:  

Set up a game plan  

Start by assigning close responsibilities to the right team members and creating a seamless workflow that ensures efficiency and transparency.  

The platform you use makes a big difference here. If you use multiple channels and platforms to assign tasks and communicate with your team, tasks will fall through the cracks. But if you manage everything in a centralized location, like your enterprise resource planning (ERP) platform, it’ll be much easier to keep track of who’s doing what and when.  

Clear responsibilities for who is preparing statements, who is reviewing them, and who gets final approval create transparency and keep the team on the same page.  

Follow a monthly close checklist  

A standardized monthly close checklist will help you build a better close process, ensuring that all tasks are completed on time and you have all the financial data you need.

Not sure where to start? Download our free monthly close checklist, then customize it to your business processes.  

Invest in a close automation and management tool

The monthly close can be time consuming when you do things manually—on average, it can take at least six days to complete the close. But with the right automation solution, you can cut out most of the manual tasks, speeding up your close.  

Explore close accounting software solutions to find the right one for your team, and you’ll see your monthly close go from a dreaded task to something you can quickly check off your to-do list.  

When selecting your close-management solution, consider how it integrates with your ERP and other software for seamless data flow. A solution that’s fully embedded in your ERP will give you the smoothest connection, creating a single source of truth for your financial data.  

2. Organize your financial documents  

Having your financial documents well organized throughout the year can significantly ease the year-end close process. This includes receipts, invoices, bank statements, payroll records, and any other financial documents.

One way to achieve this is with an organized folder hosted in a cloud file storage system, such as Google Docs or SharePoint, that your entire team has access to. Create a standard operating procedure for creating and naming folders so it’s easy for anyone on the team to find the documents they need.  

3. Conduct a preliminary review  

Before diving into the year-end close, conduct a preliminary review of your financial statements. Look for any inconsistencies or anomalies that need to be addressed. This proactive approach allows you to fix problems early and avoid surprises during the final close.

If you’ve stayed on top of your month-end close and have all your files organized, this review should be quick and painless.  

Year-end close checklist  

With these three practical tips, you’ll be ready for a successful year-end close. Now, you just need to follow a standardized process to bring it all together at the end of the year.  

A year-end close checklist can be a lifesaver, ensuring you don't overlook any crucial steps while wrapping up your financial year. Here’s a detailed checklist to guide you through the process:

1. Reconcile all accounts
   • Reconcile bank statements
   • Reconcile credit card statements
   • Reconcile loan accounts
2. ‍Review financial statements
   • Verify the accuracy of your balance sheet
   • Review the income statement for discrepancies
   • Ensure the cash flow statement reflects your transactions correctly
3. ‍Record all expenses
   • Ensure all invoices are entered and paid
   • Verify that all expense reports are submitted and recorded
   • Check that all recurring expenses (e.g., rent, utilities) are accounted for
4. ‍Verify inventory levels
   • Conduct a physical inventory count
   • Compare physical count with recorded inventory levels
   • Adjust inventory records for any discrepancies
5. ‍Prepare tax documents
   • Gather all necessary tax documents and receipts
   • Ensure all payroll taxes are filed and paid
   • Prepare 1099 forms for contractors
6. ‍Review accounts receivable
   • Ensure all customer invoices are sent and recorded
   • Follow up on outstanding invoices
   • Write off any bad debts if necessary
7. ‍Update fixed assets
   • Review and update the fixed asset register
   • Account for any new purchases or disposals
   • Calculate and record depreciation
8. ‍Conduct a final review
   • Perform an internal audit or review
   • Have a third party audit your statements if required
   • Ensure all adjustments and corrections are made before closing the books

By following this checklist, you can ensure that your year-end close is thorough and accurate, setting your business up for a strong start to the new year.

Simplify close processes with NetClose

The year-end close doesn’t need to be a stressful time. By following a standardized monthly close process, you can set up your team for a smooth year-end.

If your accounting team works in NetSuite, NetClose is the tool to ensure a clean close each month. It performs the closing calculations using data in NetSuite and automatically posts to the general ledger. This means your team never needs to leave your core financial system to perform reconciliation.  

Plus, NetClose brings a range of important closing functions into NetSuite: task management, procedure tracking and documentation, control tracking, certification management, flux analysis, and amortization and accrual subledgers. These features simplify every close and ensure robust documentation.

Read more about the top NetClose features that simplify the close, then reach out to our team for a personalized demo to see them in action.