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Financial Close Process: Checklist, Challenges, and Best Practices

By Linda Hefty .

The financial close process is a critical stage in the accounting cycle. It requires the completion of several tasks to ensure accurate financial statements. A financial close process checklist helps in tracking the conclusion of various activities, ensuring no important tasks are left out. With this in mind, it is crucial for businesses to understand the financial close process, review an applicable checklist, and be aware of challenges and best practices involved in this arena.

The financial close process explained

The financial close process requires the recording of an organization’s financial activities over a specific period of time. This process takes place at regular intervals, usually taking place at month-, quarter-, or year-end. When these periods are complete, it triggers financial statements. Companies can then gather and analyze these statements to show an accurate depiction of their financial health.

Checklist for completing the financial close process

The financial close process can be a lengthy one. This is largely because both employees and outside stakeholders rely on the information that is produced from the activities involved. For this reason, it is important for those responsible for the financial close to operate carefully and with an eye for detail.

The outcome of the information taken from the financial close process helps business leaders create key performance indicators (KPIs) and compare their own financials against those of their competitors. It is during this process that budgets and forecasted expenditures are reviewed and adjusted as needed. The 10 steps involved in this financial close process checklist include:

  1. Reconcile balance sheet accounts

    Companies must account for all finances, including cash, checking and savings accounts, credit cards, and prepaid accounts. During this phase, the accounting team will cross reference statements with receipts, banks records, and any other available resources.

    In order to ensure the balance sheets are accurate, accounting staff must document all income and expected dollars. Additionally, they must 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 does not only cover the current period that has just been recorded. The accounting team should also be checking in with balances and adjustments from the prior period.
  3. Perform account analysis and resolution of variances

    Now it is time to dig into the data and figure out why any variances exist. You should account for every variance and correct them 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 gathered 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. However, it is necessary to fulfill these responsibilities. When accounting staff prepares and reviews intercompany transactions, they ensure accounts payable (AP) and accounts receivable (AR) align between various company departments.
  7. Close subledger systems

    Subledgers contain an in-depth subset of information that is ultimately reported in the general ledger. Once you know the details of specific types of transactions, you can close these subledgers. This inches the team one step closer to a successful financial close process.
  8. Prepare and review financial statements

    Once the accounting team has all of the information they need, it is time to prepare the reports and send them down the line for management to review. 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. These will need to be reviewed, approved, and processed accordingly.
  10. Conduct a final review and sign-off of financial statements

    Once all applicable team members carefully review the reports, it is time for one final review and a sign-off of the financial statements. This lends itself to the books returning to zero and the accounting team preparing for the following close period.

Challenges in the financial close process

Accountants and financial professionals are tasked with a lot of work in their day-to-day roles. Therefore, 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. Staff often struggle to complete all of the required tasks within a limited time frame.

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

Other challenges include:

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

Best practices for a smooth financial close process

Despite the challenges related to the financial close process, it is a part of business that is not going anywhere. So, it only makes sense to harness best practices to make the most of your team’s time and energy. A few ways in which your business can improve the financial close process involve:


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


Implementing standardized processes across departments ensures consistency and accuracy throughout your organization.

Ensuring accurate data

Regularly reviewing and cleaning data ensures it is accurate at all times rather than leaving the accounting team to deal with messy information when it is time for the financial close.


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

Improve your financial close process with NetSuite

Accounting teams that are tired of chasing down information, manually entering and re-entering data, and struggling with spreadsheets every month can take advantage of enterprise resource planning (ERP) 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 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 helping with the flow of financial information across the organization. In addition, real time dashboards provide up-to-date financial information to inform business strategies.

NetSuite support provided by Citrin Cooperman

Citrin Cooperman’s Digital Services Practice has extensive experience assisting businesses in improving their processes with technologies, such as ERP systems like NetSuite. To learn more about how our team can help improve your financial close process and other ways in which NetSuite may be able to help your business, reach out to your Citrin Cooperman advisor or Linda Hefty at

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