The month-end close is the process of finalising all accounting activities for a month, including reconciliation, adjustments and report preparation.
The month-end close (or month-end process) is a critical routine that ensures your financial records are accurate, complete and ready for reporting at the end of each month. A typical month-end close involves: reconciling all bank accounts and credit cards, recording accrued expenses and prepayment adjustments, processing depreciation entries, reviewing and correcting any miscategorised transactions, reconciling accounts receivable and payable sub-ledgers, reviewing inventory (if applicable), generating financial statements and analysing results against budget. The speed and efficiency of your month-end close is a good indicator of bookkeeping quality. Businesses with clean, well-maintained books can close within 2-3 days. Those with messy records might take weeks. Reducing close time improves decision-making because you get accurate financial information sooner. SortBooks significantly reduces month-end close time by keeping books clean throughout the month. With bank reconciliation and transaction categorisation happening in real-time, the month-end close becomes a review and adjustment process rather than a catch-up exercise.
SortBooks helps with the bookkeeping behind month-end close 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 month-end close 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.
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.
Accrual accounting records revenue when earned and expenses when incurred, regardless of when cash changes hands. It provides a more accurate picture of your financial position than cash accounting.
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.
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.
A trial balance is a report listing all general ledger accounts and their balances at a specific date. Total debits must equal total credits, confirming the books are mathematically balanced.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.