The Secrets To Creating and Perfecting the Close Checklist

Article by Shagun Malhotra, Founder of SkyStem LLC

At its core, the close checklist is designed to break the month-end close process down into smaller, manageable tasks. This way, it allows finance departments to stay on schedule and lets team members see what’s next while supporting collaboration.

Even though the complexity of a close checklist usually depends on company size and business type, one thing is clear: The checklist helps keep everyone in the month-end close process well organized, which ultimately translates to cost savings during compilations, reviews, and audits.

In this article, let’s unveil the secrets of how to create a close checklist and fine-tune an existing one. Let’s jump right in.

Components of a Basic Close Checklist

The first step is to categorize the month-end close tasks to bring structure to your checklist. For example, create a document with a column for “Task Name.” Here, you can enter “Specific Activity,” which refers to a particular piece of work that needs completion, such as tax allocation. An “Activity Category” column categorizes tasks into broader chunks. “Routine v. Ad Hoc or Recurrence Type” determines whether a task is part of regular procedures or a one-time requirement, and “Ownership” assigns responsibility for its execution.

When it comes to the second group, the main objective is to manage the execution and monitoring of tasks. Therefore, companies need to create “Instructions / Policies & Procedures” to provide the necessary guidelines and procedures for owners of each month-end process. Additionally, adding “Reviewer” helps teams understand who is responsible for reviewing and approving task completion.

Other must-haves of the second group are “Deadline” and “Completion Status,” documenting the task’s development—whether it’s pending, in progress, or completed. And having “Comments” allows for additional notes or clarifications.

Keep in mind that only including the compilation of the task isn’t enough: Outlining the goals or outcomes you aim to achieve is also critical. Attach these by linking to “Source Docs” and use “Special Reference” columns to highlight the specific considerations or dependencies.

Finally, “Results” should describe what outcomes businesses expect once the task is completed successfully.

After creating all these categories, your checklist will end up looking like this.

This is a screenshot taken from SkyStem’s ART platform, but businesses can use spreadsheets to create a close checklist; the only difference is that it won’t be automated. 

3 Checklist Creation Stages

Even when armed with the knowledge of basic close checklist components, diving in headfirst is not the wisest approach for organizations. Instead, they can follow these three steps for more strategic planning. 

Step 1: Creation

Companies should carefully create a short, crystal-clear step-by-step summary of each month-end task. This will sit in the “Instructions/Description” section. 

The creation stage is also the prime time to decide when each task should be done, who will be in charge, and what they expect to get as a result, which helps businesses get things done in a well-organized way.

Step 2: Testing

Testing is the secret weapon to achieving reliable results in the business world. It aims to enhance the checklist’s accuracy and effectiveness in closing procedures. 

My pro tip for conducting thorough testing is to hand over the checklist to team members who are not familiar with the month-end close process. Their unbiased perspective allows you to pinpoint any potential ambiguities in the instructions, ensuring the readability of the close checklist.

Step 3: Optimization 

You have probably made a grocery list at some point, but let’s be honest: We do not always stick to it. And as a result, we end up forgetting to pick up the most essential items. Well, just like a grocery list, teams can overlook important steps in the close checklist. To prevent this from happening, provide training on how to use the checklist and clearly communicate the benefits it brings to the team and the company. 

Using automation tools like SkyStem’s ART is another effective way to streamline the entire close checklist process, as they reduce manual effort and speed up the closing process. It also provides real-time visibility into operations, making it easier to identify bottlenecks or delays. This way, businesses can be more proactive and increase efficiency.

Wrapping Up

The month-end close helps a business update financial records, allocating governance/reviewer roles to make sure they are accurate. Given that this process includes numerous activities such as collecting information, preparing financial statements, and conducting a final review, creating a close checklist becomes significant. By breaking down these activities into manageable components, companies can ensure everything is well-organized and save valuable time and resources.

This article includes a client of an Espacio portfolio company