Month-End Financial Close

Month-End Financial Close turns the period's operational and accounting activity into a reviewed financial result. Finance coordinates the work, but purchasing, sales, warehouse, production, and other record owners may need to resolve exceptions before the books are ready to close.

When to use this workflow

Use it at the end of each financial period when management or external reporting needs a supported result. The close calendar, approval rules, and materiality thresholds come from your organization's accounting policy. Multi-entity organizations may continue into Inter-Entity Period Close after each entity completes its own review.

Featured capabilities

• Banking and reconciliation help connect recorded payments and receipts to bank activity.
• Receivables, payables, and inventory records support the review of balances, receipts, shipments, production, and cost of goods sold.
• FIFO Bucket COGS Adjustment supports a reviewed cost correction where it applies. It is not a quantity adjustment.
• Reporting in VersaCloud ERP provides financial and operational reports for the period review.

People and preparation

The finance owner sets the period and coordinates review. AR, AP, banking, inventory, production, and other operating owners resolve facts in the records they control. An authorized accountant prepares or reviews adjustments, and the designated finance approver accepts the final result. Before starting, confirm the close period and cutoffs, account and rate policies, materiality threshold, open approvals, and who owns each exception. A configured report or draft journal does not replace the organization's accounting judgment.

Set the period and gather open work

The finance owner sets the close calendar. Confirm the period, cutoffs, responsible reviewers, and approval path. Ask operating teams for late receipts, shipments, bills, invoices, production work, and other activity that belongs in the period. Record what remains open and who will resolve it. A report run before cutoff questions are settled is a working view, not the final close result.

Reconcile cash and review subledgers

Match bank activity to recorded receipts and payments, and investigate missing or duplicated transactions. Review open customer and supplier balances, unapplied payments, bills waiting on receipts, and incorrectly dated transactions. The people who own the underlying orders or bills resolve factual differences; finance records the resulting accounting treatment.

Review inventory, costs, and foreign currency

Compare inventory value with the period's receipts, shipments, transfers, and production results. Investigate unusual cost-of-goods-sold movements and material variances with inventory or production owners. Use FIFO Bucket COGS Adjustment only when a cost correction is approved; a missing physical quantity needs the appropriate inventory process.

If foreign-currency balances require period-end revaluation, select the receivable, payable, asset, and liability accounts covered by your policy. Review the rate and proposed unrealized gain or loss, inspect the draft entry, and post only after approval. Set the reversal date when your policy calls for the revaluation entry to reverse in the next period. Revaluation updates the period's accounting measurement; it does not settle the underlying customer, supplier, or other balance.

Approve adjustments and close

Prepare supported accruals, corrections, and other journals. Review account, entity, date, dimensions, debits, credits, and supporting evidence before posting. Run the financial statements again, investigate material movements against prior periods or budget, and obtain finance approval. Close the period only after required exceptions are resolved or documented under your policy.

Decisions and handoffs at each stage

1. Set period and cutoffs

   Owner: Finance owner and operating teams. Input: close calendar and open work.

   Work and decision: Agree which receipts, shipments, bills, invoices, and production activity belong in the period. Assign late or disputed items before reporting.

   Evidence: Period activity and an exception list under the organization's close control.

   Handoff: Each subledger owner knows what must be completed or explained.

2. Reconcile cash and subledgers

   Owner: Banking, AR, AP, and finance. Input: bank statements, receipts, payments, customer and supplier balances.

   Work and decision: Match cash activity; investigate missing, duplicate, unapplied, or incorrectly dated entries. Return factual differences to the team that owns the underlying transaction.

   Evidence: Bank reconciliation, AR and AP balances, supporting corrections.

   Handoff: Finance receives reconciled balances or documented open exceptions.

3. Review inventory and cost

   Owner: Inventory, production, and finance. Input: receipt, shipment, transfer, production, and valuation activity.

   Work and decision: Explain quantity and cost movements. Use an approved cost correction only for cost; send a physical quantity difference through inventory control.

   Evidence: Inventory valuation review and any approved FIFO Bucket COGS Adjustment.

   Handoff: Finance receives a supported inventory and cost result.

4. Revalue foreign balances

   Owner: Authorized accountant and reviewer. Input: eligible foreign-currency receivables, payables, asset and liability accounts.

   Work and decision: Select accounts and period-end rates under policy. Review the draft unrealized gain or loss, approve posting, and choose reversal only when policy requires it.

   Evidence: Rate review and posted revaluation journal, with reversal date if used.

   Handoff: Finance has a supported period-end measurement; underlying balances remain open until settled.

5. Approve adjustments and report

   Owner: Accountant and finance approver. Input: supported accruals, corrections, and reviewed subledgers.

   Work and decision: Check dates, accounts, dimensions, debits, credits, and explanations. Investigate material report movements before approving the final period result.

   Evidence: Posted journals, financial reports, and close approval evidence.

   Handoff: The entity result is ready for management reporting or group close.

Variations and exceptions

Foreign-currency revaluation applies only to accounts selected under the organization's policy; it measures an open balance at period end and does not settle it. A reversal belongs only where the accounting policy calls for one. A FIFO Bucket COGS Adjustment corrects an approved cost issue, while a physical quantity discrepancy returns to inventory control. Multi-entity consolidation follows the entity close and has its own reconciliation and elimination review.

Completion check

The period has reconciled cash, reviewed receivables and payables, investigated inventory and cost, completed required foreign-currency revaluation, and supported approved adjustments. Financial statements have been reviewed and remaining exceptions have an owner. Group reporting can then continue through Inter-Entity Period Close.