Quick Answer
Best practices for financial close include maintaining a detailed close checklist with assigned owners, performing continuous accounting throughout the month rather than batching at period-end, automating recurring journals and reconciliations, conducting a pre-close review at month-end, and holding a retrospective after each close to identify improvements. Target five working days for a complete close.
The biggest shift in modern close practices is moving from a batch process (everything happens in the first week of the new month) to continuous accounting. This means reconciling bank accounts daily, processing supplier invoices as they arrive, reviewing revenue recognition weekly, and updating accrual schedules throughout the month.
1. Close checklist with accountability. Every close task should have an owner, a deadline (expressed as working day — WD1, WD2, etc.), and dependencies clearly mapped. Track completion in a shared tool, not via email.
2. Pre-close activities. Before month-end, ensure payroll is processed, bank reconciliations are current, all known invoices are posted, and prepayment/accrual schedules are reviewed. The more you do before the period closes, the less you need to do after.
3. Standardise journal entries. Use templates for recurring journals. Depreciation, amortisation, prepayment releases, and loan interest should post automatically or with a single approval click.
4. Intercompany reconciliation. For multi-entity groups, reconcile intercompany balances before month-end. Disagreements between entities are the single biggest cause of close delays in group reporting.
5. Balance sheet reconciliation. Reconcile every balance sheet account monthly. Focus on high-risk accounts: debtors, creditors, accruals, prepayments, and bank. Use a standard reconciliation template.
6. Analytical review. Before finalising, perform a reasonableness check. Compare each P&L line to budget, forecast, and prior month. Investigate anything unexpected.
7. Documentation. Document assumptions, judgements, and unusual items during the close. This saves time when auditors review the period and provides institutional memory.
After each close, spend 15 minutes as a team asking: What went well? What held us up? What can we improve next month? Track your close timeline and celebrate improvements.
Cloud accounting systems, automated bank feeds, FP&A platforms like Grove FP for consolidation and reporting, and close management tools all contribute to faster, more reliable close processes. The investment typically pays for itself within two to three months through time savings.
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FAQ
Best-in-class companies close within three working days. A strong target for most UK mid-market companies is five working days (WD5). If you are currently at WD10 or beyond, aim to reduce by one day per quarter through process improvements and automation.
Year-end close includes additional steps: finalising corporation tax provisions, reviewing going concern, preparing statutory accounts disclosures, and coordinating with external auditors. Start planning the year-end close at least two months in advance and create a separate, expanded checklist.
Dedicated close management tools (FloQast, BlackLine) are valuable for larger finance teams with complex multi-entity close processes. For smaller teams, a well-maintained spreadsheet or project management tool tracking the close checklist is sufficient. Many FP&A platforms include basic close tracking features.
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