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Balancing Month-End (Goodbye Excel)

Last updated on October 26th, 2016 at 02:49 pm

When you hear the words “month end process”, what do you envision? You probably picture someone, an accountant, or controller, someone like Bob Cratchett, hunched over the books, reconciling everything from receivables and payables, cash flow, budgets, and P&Ls.

That may not be all that far from the truth.

What is “month end”?

Simply put, it is the processing of transactions, journal entries and financial statements for an organization’s current month’s revenues and expenses, assets and liabilities at the end of each month. It is the proper “cut off” of a month’s financial activities. Companies use standard and recurring journal entries, and checklists to perform all of these tasks.

Financial statements are also prepared, and include a comparison of the amounts and percentages of the current month to those of earlier months. If percentages or amounts aren’t as expected, reviews have to be completed before statements can be released.

Once all of the close tasks have been completed and journal entries have been posted, the reconciliation process begins. This typically requires someone to dig through a workbook to find any reconciling items.

The controller is the one who assigns work to the team and oftentimes uses an Excel checklist to track completion. They ensure everything is on schedule by getting periodic updates, holding status update meetings, making sure that everyone is communicating.

Game of Thrones: Lannister House Financial Statements

“For any accountants not familiar with Game of Thrones, one of the coolest parts of the series is how thoughtful the author George RR Martin was about finances within his fantasy world.

The key takeaway is that the seemingly powerful House of Lannister is actually severely in debt as a result of massive loans taken from the Iron Bank of Braavos. Loans were required to offset costs from a massive army and lavish social life, while production from gold mines greatly decreased.

What if the Iron Bank called for an audit? Well, first we’d need some financial statements. What would the House of Lannister’s financials look like?” – FloQast

FloQast prepared them: House of Lannister – Financial Statements

Month end closing isn’t a sexy topic to most people. For accountants, and accounting departments, it causes immense amounts of stress (and probably panic attacks). The happiest moments are those where everything balances, right from the start. Realistically, that never happens without reconciliation, or without the right technology.

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