Chapter 1

How to Build a Close Checklist that Sets Your Team Up for Success

How to Build a Close Checklist that Sets Your Team Up for Success

The close process is made up of many moving parts — with interdependent pieces that can either streamline or bottleneck the whole system. Think of the close checklist as more of a playbook. It’s a team tool that fosters accountability. It encourages timeliness, and serves as a way to oversee and track the intricacies of the monthly closing process.

For Desene Sterling, financial controller at Sourcegraph, the close checklist lets her know when every part of the month-end close are complete. She says, “A close checklist is being able to track when something is done and who's doing it, so you can keep on top of everything.” For Sterling, it’s hard to fathom why accounting teams wouldn’t have a checklist.

A close checklist enables you to optimize the close, whether you’re a small team or a large one. It facilitates roles and responsibilities, streamlines dependencies, and sets organizations up to excel at their work and expand without significantly hindering the close process.

When your close checklist achieves the ideal level of detail, it benefits by reducing mistakes, improving accuracy, increasing efficiency, and preparing your company for audits.

What’s on a month-end close checklist?

The close checklist is a documentation that breaks the month-end close process down into smaller objectives. It helps your team stay on schedule and lets them see what’s next — while supporting collaboration.

Close checklists are often organized by functional areas, which are typically roughly aligned with financial statement line item and balance sheet account groupings. Tasks can be broken down by who’s doing what as well. Sterling likes to put more obscure tasks on her checklist. She says, “I try to add tasks that aren’t blatantly obvious. For example, I wouldn’t put ‘run financials,’ which obviously needs to be done at the end.”

The complexity of a close checklist generally depends on team and company size, as well as the type of business. It’s an ever-evolving template that you can adapt and improve as often as needed.

How to start building your month-end checklist

Although your close checklist will be ever-evolving, you have to start somewhere. For Sterling, this begins with evaluating the close process. She says, “I like to observe a full close and sit down with every member of the team and try to figure out what they are doing and why they're doing it. I look at how that’s affecting other pieces — and what other people are doing.” She likes to categorize each item on the close checklist. For example, whether it’s a payroll function, revenue function, or GL function.

Sterling also likes to identify areas of the close that are slow, what sections are done chronically late, and dependencies. “I think my biggest thing is understanding dependencies. In prior companies I worked for, it was taking two weeks to close. And it was because people weren't understanding what tasks could happen early, and what tasks could be put off until the end.”

Following best practices is also a crucial part of building your close checklist. This includes:

Organize your checklist in a way that makes sense for your organization

Your team size, company size, and other factors should influence how you organize your checklist. Ask yourself, what’s impactful operationally. Look at the necessary actions surrounding these items that need to be performed to close the month. From there, determine what will serve best as a task on the checklist.

Close checklists are often organized by functional areas, which are typically roughly aligned with financial statement line item and balance sheet account groupings from the general ledger, such as cash and cash equivalents (bank accounts and bank reconciliations) accounts receivable, prepaid expenses and amortization, fixed assets and depreciation, accounts payable and other liabilities, accruals, credit cards, , expense accounts, and revenue, but also includes other functional areas like financial reporting, tax, and other company specific workflows.

Another method that helps you create tasks is to work backwards from the final deadline. What has a deadline and when is it? Does it have a dependency? Anything that doesn’t have a dependency can get pushed out until later.

Look where you still need to have a manual component of checking

Some areas of your close may need double checking because they’re sensitive or critical. As an example, payroll. Decide if you want to add a task for a manual check, for things like bonuses or severances.

Decide who’s doing what

Your team is a big part of the close checklist. Not only can you break up tasks by who’s doing what, but your team can also act as an internal control — in other words, segregation of duties. Have proper preparers and approvers for each task. And re-assess and re-allocate duties as you go along depending on who has the most time-consuming work.

Create notifications

If you’re using a month-end close solution that allows you to create notifications, use them. Notifications can be helpful for anyone using the checklist, but particularly those overseeing it. It lets them know the pieces that are done, especially the components that have dependencies. Notifications can also be set to remind people to check off their tasks. And you can set it up as a daily digest that lets you monitor the close pace and any items that are behind schedule.

Work toward the right level of detail

You can have too much detail, or not enough. With the right level of detail, context should be easily understandable to anyone on the team, but there should not be unnecessary items that need to be signed off on.

Your goal should also be for anyone on the team to come into the checklist and understand the task based on the description, related links, and work completed in prior periods — if they can’t, you’ll likely need to add more detail.

Implement tech solutions

Tech solutions can further streamline your financial close by providing tools that make your checklist more efficient. The key is introducing solutions that don’t add friction into your process. The right tools can automatically roll forward your checklist from the previous month to the next month, schedule frequencies and business date due dates so you always have the right checklist for the quarter-end and year-end close, and most importantly uses integrations into your accounting software and financial data systems so that automations can sign off on work - such as journal entries and account reconciliations -  that is complete or flag if changes have unexpectedly occurred and a task needs to be reexamined.

Onboarding your team to the month-end close checklist

Sterling feels that the accounting team leader sets the tone. While some may view a close checklist as micromanaging, she looks at it as dotting your i’s and crossing your t’s. It’s making sure close is efficient. “I have instilled in my team that updating the close checklist is super important. I love going into the checklist and seeing everybody in there — like it's always open on their desktop, and they're actively marking things off. Our team knows where we stand.”

So let your team know the benefits: A close checklist can streamline the process to take 5 days instead of 2 weeks. It’s not a hard sell when you address dependencies, and that the close checklist lets people better budget their time. It helps set mid-close deadlines that are crucial, and allows teams to pinpoint areas that are always done early or late, and then lets them streamline the month-end close process more effectively.

When everyone is using the checklist, you prevent surprises. You can build a backup for everyone. By identifying overlap, you can decide who’s best suited to take over a teammate's tasks when needed.

Leaders can use the checklist as a tool. Sterling checks hers multiple times a day to make sure everything is running smoothly. It can be used to pinpoint who might need a nudge. When you create a culture that sees the checklist as valuable, it becomes a highly effective part of your month-end close.

The close checklist on a company-wide level

Sourcegraph’s close checklist is open. “People can always see where we stand on close, across our whole company.” Doing this offers transparency, especially for other teams who are affected by the month-end close, like the legal and finance teams. It’s a great way to build partnerships throughout the organization.

Take it one step further by educating other teams about the closing process. Let stakeholders know what you will need from them and why — it reduces friction, and lets you be seen in a more positive way. It’s a way to find out if another team has a specific need that you can add to your  checklist.

Communication is an excellent way to keep people involved. Post updates that can benefit the organization as a whole in real time.

Updating your month-end close checklist

Sterling says, “Generally, if there's a change in the business, there's going to be a change in process for you.” This may be due to company growth, adding new team members, or having new areas of operational impact.

One way to determine when to update your checklist is to find metrics that show its effectiveness. For example, you might look at the number of journal entries. Is it changing period over period? Were there any unexplained discrepancies in financial information from previous months that could have been avoided by better process? If something isn’t working well, it’s time to update.

New entities also affect your checklist — you’ll want to decide if the work is going to be done at the all-subsidiary level or individual-subsidiary level. Some new entities might be small enough to only need one person, but that may change in the future as well.  

Final thoughts

For Sterling, the biggest pitfall is not having a close checklist. Not only will it streamline your close process, but it encourages accountability and lets you share important decision-driving information more quickly. Today’s tech gives you powerful tools that benefit teams as well. Your  checklist is a stepping stone to further streamline and automate your work so you can close faster and more accurately.

Continue to 
Chapter 2
Best Practices for Building a Robust and Efficient Reconciliation Workflow
Don’t Miss Our Latest News
Subscribe to our newsletter and get all the news from Numeric.
No spam.
Thank you
Your submission has been processed.
Oops! Something went wrong while submitting the form.

Join the future of the month-end close

AI-assisted. Operationally efficient. Audit ready.