Closing the books is the process of finalising all accounting entries for a period and preparing the accounts for the next period. It includes reconciliation, adjustments and report generation.
Closing the books (also called period-end close) is the process of completing all accounting activities for a month, quarter or year. The close process ensures that all transactions have been recorded, all reconciliations are complete, all adjustments have been made and the financial statements for the period are accurate and final. A typical close process includes: reconciling all bank accounts, recording accruals and prepayment adjustments, processing depreciation, reviewing and correcting miscategorised transactions, generating financial statements and locking the period to prevent further changes. The speed of your close process is a key efficiency metric - best practice for small businesses is closing within 5 business days of period-end. Delays indicate bookkeeping problems that need addressing. SortBooks shortens the close by fixing miscoded transactions as you go and showing which payments match invoices and bills, turning the close from a catch-up exercise into a quick review process.
SortBooks helps with the bookkeeping behind closing the books by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing closing the books by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
The month-end close is the process of finalising all accounting activities for a month, including reconciliation, adjustments and report preparation.
Reconciliation is the process of comparing two sets of records to ensure they agree. Common types include bank reconciliation, accounts receivable reconciliation and intercompany reconciliation.
A journal entry is a record of a financial transaction in the accounting system. It includes the date, accounts affected, amounts and a description of the transaction.
Financial statements are formal reports that summarise your business's financial position and performance. The three core statements are the profit and loss, balance sheet and cash flow statement.
Year-end adjustments are journal entries made at the end of the financial year to ensure accounts accurately reflect the year's financial activity. They include accruals, prepayments and provisions.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.