The month end close is a crucial bookkeeping process for all startups. It ensures that all financial records are up-to-date and accurate and provides businesses with a clear picture of their financial health. 

You may be hesitant to perform a month end close due to time constraints or a lack of available team members for the job, but the benefits outweigh the time spent completing the process.

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Completing a month end close is an essential pillar of monitoring your company’s budget and financial standing. When you reconcile your books, you’re confirming all your transactions are accounted for and represented correctly in your financial statements. This enables you to identify any issues or areas of concern and take corrective action. 

This accounting procedure is time-consuming due to the number of details and precision required, but there are steps you can take to streamline month end close for your business.

Why Month End Close Is Important

Without a month-end close, managing all aspects of your startup’s finances is difficult. As your company grows, you’ll see a substantial increase in accounts payable, accounts receivable, and additional items on your balance sheet. When unreconciled transactions go unaddressed month over month, you not only begin drowning in financial records but risk overlooking fraud, missing out on operating insights, leaving investors in the dark, or misrepresenting accounts to the IRS. 

Let’s look at some of the most impactful reasons we suggest closing your books monthly: 

1. Investors Expect Accurate Numbers

Accurate budgeting and reporting are especially important when communicating with investors.  Anyone with a stake in your company must regularly see cash projections, balance sheets, and P&L statements to show where revenue stands and that you’re running your business effectively. Investors expect updates on all financial statements at quarterly board meetings, so closing your books monthly helps you pull these statements quickly and gives you confidence that you’re presenting accurate numbers every time. 

2. You Can Better Prepare For Unforeseen Circumstances

It's difficult to make real-time business decisions without understanding your monthly expenses and cash flow or using these numbers to build financial forecasts.  

Take the 2020 pandemic as an example. When the pandemic hit, the market took a sudden steep downturn, and businesses large and small had to make radical business decisions seemingly overnight to stay afloat. 

The rapid decline of the economy showed the importance of preparing for unforeseen circumstances. Financial forecasting predicts your company’s future financial standing by pulling chronicled revenue and cash flow data.  Closing your books monthly supplies that information. Without forecasting, abrupt variables can severely damage your company. 

3. Records Keep You Audit Ready

Nobody wants to deal with an IRS audit. If that scenario pops up for your business, you must present a balanced and accurate general ledger reflecting the past quarter, year, or even multiple years. When the IRS looks at these records, they should be able to validate all of your accounts and transactions. Without this financial information at the ready, you can find yourself in hot water and scrambling at the last minute. 

4. For Financial Planning

Businesses require a ton of financial planning. One misstep can create a tangled web of problems, which is why accounting professionals suggest using cash flow projections. Financial planning helps you see your company’s future and where you can start preparing for growth or where you should adjust to increase runway. 

By reconciling revenue, AP, and AR each month, you’ll create better cash flow projections and have a more transparent view of money coming in and out of your company.

5. Better Budget Monitoring

Startups need to stick to a budget. Going over budget can slingshot your company past your runway to your cash zero date. By the time you realize what’s happening, it may be too late.

Without reconciliation, transactions blend, making expenses hard to track. Operating expenses need to line up with the number of sales and total revenue. When there’s no starting and stopping point, it’s nearly impossible to pinpoint areas of overspending. 

5. AR and AP Consistency

Accounts payable and accounts receivable departments have a lot of responsibility. AR ensures that the company receives all payments due by clients to cover expenses of goods or services provided. AP confirms the company pays its bills to vendors, banks, or credit cards on time and in full. 

Vendors and financial institutions expect on-time payments. If you don’t close out AP and AR ledgers each month, you’re assuming someone else is tracking transactions throughout the year with precision. If you miss a payment, you not only have to spend time combing through a sea of dates and numbers to reconcile, but you risk additional fees or interest charges on your payment – ultimately costing your business money. 

6. Make Tax Season A Breeze

At the end of each tax year, you must close out all your books to file. If you wait, you’ll be stuck organizing and reconciling every transaction from the entire year. Not to mention, if you’re missing a payment from a vendor or catch other discrepancies, you’re stuck waiting on the fix. 

Closing your books monthly takes time, but not as much time as waiting until the end of the year. 

What Is The Process Of Closing Monthly Books?

Closing books involves assembling, checking, and filing all financial data and information. A bookkeeper typically reviews all records with extreme detail, reconciles them, and drafts a report when the month closes. 

While the process can vary, the most common month end closing procedure follows these four steps:


  • Collect and confirm the following records: expense accounts, revenue, invoice payments, employee vacation, payroll, payable interest expense, and taxes. 
  • Perform inventory count (if applicable) and review all fixed assets.
  • Review and post journal entries for amortization and depreciation.


  • Reconcile prepaid accounts and intercompany accounts.
  • Ensure numbers from accounts payable and accounts receivable match.


  • Go over analysis with stakeholders.


  • Convene all documents for internal and external audits.

Closing your company’s books monthly requires attention to detail and a lot of manual entry unless you’re using bookkeeping software. As intimidating as it may seem (unless you have an accounting background), it’s vital for running a successful business.

How Zeni Does It Differently 

Our experience with traditional bookkeeping gave us the idea to create Zeni, the first AI-powered bookkeeping service paired with personalized human interaction.

We take the bookkeeping basics and blend in automation to speed up the time you wait between month’s end close and receiving your information. Instead of waiting a full month, we get your books to you a week after the end of the month with our continuous closing process. Zeni closes your books daily under GAAP compliance, eliminating the number of accounts that need reconciliation at month’s end. 

Zeni’s Monthly Closing Process

Zeni starts with two steps: recording and reconciliation. However, our continuous closing process shortens reconciliation time, because we’ve already taken care of the majority of errors and found missing information throughout the month. If we find problems with any transactions rolling in at the end of the month, we can focus there rather than tackling an entire month’s errors at once. 

Instead of receiving a packet after the month’s end full of numbers with no context, no individual conversation with your bookkeeper, or analysis of trends and KPIs, we set up a pre-close meeting to touch base on the process. During the pre-close meeting, your controller will request any missing information needed to complete the close. We check in again if we’re missing anything after the initial pre-close. We all need reminders sometimes!

After we finalize all information, we conduct a post-close meeting and send you an email with tailored insights, trends, and KPIs. We can make any final adjustments if needed and answer lingering questions or concerns. Your controller is available anytime for feedback and customization tailored to your business needs. Every client has unique needs and preferences; if you want your team to do something differently, we’ll happily implement your request on the following month’s close.

Performing a month end close is a must for all businesses, regardless of size and age. The process keeps your finances organized, accurate, and ready for tax time. Don’t stress over reconciling your books each month; let us handle it for you. 

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