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 dramatically reduces close time by keeping transactions categorised and reconciled in real-time throughout the period, turning the close from a catch-up exercise into a quick review process.
SortBooks automates the bookkeeping processes related to closing the books by connecting to your Xero account and using AI to categorise transactions, reconcile bank feeds and generate accurate reports. Instead of manually managing closing the books, SortBooks handles it automatically with 97%+ accuracy - saving you hours every week and ensuring your books are always up to date and compliant.
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.
SortBooks handles all the complexity automatically. Just connect Xero and let AI manage your books.