Financial close is the process of checking, adjusting and finalising a business’s accounts at the end of a month, quarter or year so that accurate financial statements can be produced. It runs from recording transactions and reconciling accounts through to adjusting entries and closing the books. Most finance teams take around six calendar days to close a month.
Key Takeaways
- Financial close is the whole end-of-period process. Closing the books is only its final step.
- There are eight steps, from identifying transactions to closing the books, and they need to happen in order.
- APQC benchmarks put the median monthly close at 6.4 calendar days. The fastest quarter of organisations finish in 4.8 days or less.
- Most delays come from missing data, manual work, no standard process and systems that don’t talk to each other.
- Good accounting software and a written close checklist are usually the quickest ways to shave days off.
What is the Financial Close Process?
Financial close is everything an accountant does to finalise a set of books for a period, whether that’s a month, a quarter or a year. It ends with a set of financial statements that the business, its lenders, HMRC and Companies House can rely on.
Financial close clubs all the accounting and financial processes that lead up to and include the closing of books on the preceding month, quarter, or year. Under the financial close come eight steps, which are the identification of transactions, recording them in journals, posting them on the general ledger, preparing an unadjusted trial balance, reconciling debits and credit, creating adjusting journal entries, running an adjusted trial balance and financial statements, and closing the books to reset income statement accounts to zero and lock in balance sheet accounts as of the period’s end.
In the end, you will get financial statements that your clients will use for business analysis, comparisons with previous budgets, and KPI generation. External stakeholders such as investors, lenders, and regulatory agencies like HMRC and Companies House demand these financial statements for investment and regulatory purposes.
What Is the Difference Between Financial Close and Closing the Books?
Financial close is the whole end-of-period process, from recording transactions to producing the financial statements. Closing the books is just the final step, where temporary income statement accounts are reset to zero and the balance sheet is locked for the period. Every close includes closing the books, but closing the books isn’t the whole close.
You may have noticed multiple accountants using financial close and closing the books interchangeably. However, they are quite distinct.
It is a broad term that covers all of a month’s accounting processes but is not limited to closing the books. In short, financial close covers the whole accounting cycle, from the generation of statements to closing the books.
On the other hand, closing the books is just the final step in the financial close. The main objective of closing the books is to reset temporary accounts to zero and lock in the prior period’s balance. Temporary accounts, also referred to as nominal accounts, are those found on the income statement to accumulate the period’s revenue, expenses, gains, and losses.
| Financial close | Closing the books | |
| Scope | The whole end-of-period process (8 steps) | The last step only |
| Accounts involved | Every account in the ledger | Temporary (income statement) accounts |
| Main output | Adjusted trial balance and financial statements | Nominal accounts reset to zero, balance sheet locked |
| When it happens | Over the first working days after period end | At the very end of the close |
What Are the Steps in the Financial Close Process?
The financial close has eight steps: identify transactions, record them in journals, post them to the general ledger, prepare an unadjusted trial balance, reconcile debits and credits, make adjusting entries, run the adjusted trial balance and financial statements, then close the books. Each step relies on the one before, so the order matters.
As mentioned above, there are 8 steps to complete the financial close process, which must be followed in ascending order.
- Identification of transactions
- Recording it in journals
- Posting it on the general ledger
- Preparing an unadjusted trial balance
- Reconciling debits and credit
- Creating and adjusting journal entries
- Running an adjusted trial balance and financial statements
- Closing the books to reset income statement accounts to zero and lock in balance sheet accounts as of the period’s end
Step 5 is where most of the time goes. If you want to tighten it up, our guide to general ledger reconciliation with automation tools goes into more detail.
How Long Does the Financial Close Take?
Going by APQC’s benchmarks, a typical organisation takes about six calendar days to close its books each month, measured from running the trial balance to finishing the financial statements. The fastest teams manage it in under five days. A year-end close takes a lot longer, with a median of 18 days.
The monthly figures come from APQC’s Open Standards Benchmarking survey of around 2,300 organisations, reported by CFO.com on 5 March 2018. The median was 6.4 calendar days, the top 25% closed in 4.8 days or less, and the bottom 25% needed 10 days or more.
For the year-end, APQC research published on 8 April 2026 found that top performers finish their annual close in 10 days or less, against a median of 18 days and 35 days for the slowest.
| Close type | Top performers | Median | Slowest performers |
| Monthly close | 4.8 days or less | 6.4 days | 10 days or more |
| Annual (year-end) close | 10 days or less | 18 days | 35 days |
In our experience, a small or owner-managed business with up-to-date bookkeeping and bank feeds can realistically close a month in three to five working days.
What Are the Most Common Financial Close Challenges?
The financial close usually slows down for five reasons: no standard process, too much manual work, missing data, rushing to hit a deadline and systems that don’t connect. Each one adds time and raises the chance of errors in the final statements.
We agree that the process is time-consuming and complex for you and your competitors. You must have faced unnecessary hurdles while doing it. By avoiding these hurdles, you complete the cycle.
Lack of Uniformity
Some accounting practices ignore uniformity. When performing this process, they simply rely on the accountant’s memory instead of following standard operating procedures. However, this increases the chance of missing crucial information.
For example, some accountants may report expense claims in their own way, which creates a lot of confusion. Lack of uniformity creates possibilities of errors, and it also adds to your time and effort.
Lack of Automation
The more you insist on doing this process manually, the longer it will take, increasing the chances of making errors. Therefore, by adopting accounting software, you can reduce the manual workload to a greater extent.
Lack of Complete Data
To do a financial close, you will require all the data ready because incomplete data will only lead to confusion. For example, missing invoices and expense reports will lead to incorrect account balances. To rectify this, your accountants will have to spend time on it, leading to loss of time and productivity.
Process in Rushed
If the financial close is done speedily, you can start by preparing financial statements and issuing them to stakeholders. But that does not mean you must skip the process. These statements are the output, and they have to be accurate. Based on them, your clients can apply for loans or make informed decisions. Any error in them will lead to a loss of reputation for your accounting practice.
Lack of Integration
When the required data is stored in a completely different system, you will have no option but to manually collect and compile it. This only increases the time spent and errors in the process.
Each challenge and the quickest way to fix it
| Challenge | What usually fixes it |
| Lack of uniformity | A written close checklist and standard procedures the whole team follows |
| Lack of automation | Bank feeds, recurring journals and automatic reconciliation |
| Incomplete data | Firm cut-off dates for invoices and expense claims |
| Rushed process | A review and sign-off step before statements go out |
| Lack of integration | Connecting payroll, sales and banking systems to the ledger |
How Can Accounting Software Speed Up the Financial Close?
Accounting software speeds up the financial close by taking over the repetitive jobs: bank feeds, recurring journals, matching transactions and flagging differences. Xero, QuickBooks Online and Sage handle most of this for smaller businesses, while larger finance teams often add a dedicated close tool such as BlackLine or FloQast.
Integrating accounting and financial software can help overcome the above-mentioned challenges in the process. It can improve your process and save time, which can be devoted to other important tasks such as financial analysis and forecasting.
AI is starting to play a part too. APQC’s April 2026 research found that 31% of organisations already use AI in their record-to-report processes, and another 39% are in the early stages of adopting it.
There are some other benefits, too, which are as follows:
Promote Automation
It achieves that by reducing or eliminating manual work, such as transferring journal entries into the general ledger, thus reducing the chances of error.
Streamlines Reconciliation Process
This is achieved by collecting data from various sources, documents, and systems. Accounting software can also detect any discrepancies quickly so that remedial measures can be taken.
Integrate Data and Keep All Information Consistent
Accounting software will ensure that accountants get all the information available in real-time, quickening the process.
Real-Time Dashboards
All accounting software has dashboards allowing you to check the numbers whenever and wherever you want.
At Corient, we use our own AI tools alongside the ledger software. Corby X takes care of reconciliations and Sherlock flags errors before anything reaches the reviewer, so there are fewer surprises late in the close.
People Also Ask
What is financial close in accounting?
Financial close is the set of tasks accountants carry out at the end of each month, quarter or year to make sure the books are complete and accurate. It covers recording and reconciling transactions, posting adjustments and producing the financial statements. Once it’s done, the period is locked so nobody can change the figures by accident.
How long should a month-end close take?
Most organisations take around six calendar days, according to APQC benchmarks, and the best performers finish in under five. For a small business with up-to-date bookkeeping and bank feeds, three to five working days is a realistic goal. If your close regularly runs past ten days, it usually points to missing data or too much manual work.
What is the difference between a soft close and a hard close?
A soft close is a quicker, lighter close used for monthly management reporting, and it skips some adjustments and detailed reconciliations. A hard close is the full process, with every accrual, prepayment and reconciliation done. It’s normally used at quarter end and year end, or whenever the statements are going to lenders, investors or HMRC.
What should a financial close checklist include?
A good checklist covers bank and credit card reconciliations, sales and purchase ledger reviews, accruals and prepayments, depreciation, payroll journals, VAT control account checks, intercompany balances and a final review of the trial balance. Give each task an owner and a due date, so everyone can see what’s left and nothing gets missed at the last minute.
Can accounting firms outsource the financial close?
Yes. Many UK practices outsource all or part of the close, such as reconciliations, journals or management accounts, to free up their own team for advisory work. The firm still reviews and signs off the numbers. Corient has provided this kind of support to UK accountancy firms since 2011, working as an extension of the in-house team.
Conclusion
Corient is a Coventry-based outsourcing partner that has supported UK accountancy firms since 2011. Our accountants take on the time-consuming parts of the close, from bookkeeping and reconciliations to management accounts and year-end files, and our AI Crew tools help speed things up. Your firm keeps control of the review and the client.
To conclude, we would like to reemphasise that the financial close is very important for your clients. All the reports are generated based on the financial close, which will give them a picture of their health and help them take corrective steps if required. However, we understand that financial close is complicated, and a vast amount of data can overwhelm even the most prominent accounting practice. Therefore, you can outsource some of your excess workload to an outsourcing accounting service provider such as Corient Business Solutions.
Depending on where your team is stretched, that could mean bookkeeping outsourcing, management accounts or year-end accounts support.
We are an accounting outsourcing service provider that offers financial close services through our professional and experienced accountants. For more clarity on our services, please do contact us. We will set up an online meeting and explain to you in detail at your convenience.
