Many month-end checklist tasks could be automated, but not this one: Thinking of what the changes since last month mean for your business.

It’s this time of the month again: Month-end closing! No entrepreneur likes the admin work involved with month-end closing, but you can’t escape it.

Surely, you can automate it?

Well, think twice. Most month-end closing tasks take 2 minutes per month, and automating them would probably take 5 hours per task.

There is a better way that involves an Excel list and some manual work. What might sound horribly old-school and inefficient is actually the best way to avoid chaos and hectic down the road: If you keep your business in order at the end of every month, you won’t struggle to find your bank documents for your finance audit. You will notice accounting errors at the end of the month they occurred, not one day before presenting your annual results to your board. You will never be surprised by expiring contracts or higher-than-anticipated cloud costs.

Let’s get specific. Here is an overview of my month-end closing list I use at Yonder, the B2B SaaS company I co-founded.

1. Finance Checklist

The most important month-end closing tasks are finance-related:

• Accounts Receivable: First, I check whether we have sent all due invoices to our customers. Sending invoices is the first step towards a positive cash flow, and many entrepreneurs “forget” to send customer invoices on time. That’s cash thrown out the window. Once all customer invoices are sent, I check for any overdue customer invoices. Unfortunately, payment morale has declined in recent years, so chasing money from customers is a constant task.
• Payroll: This one is pretty obvious. You have to run your payroll on time, or your team will soon lose trust in your financial situation. But payroll goes beyond wiring the money — settle social security, file the documents, etc. If you do this only once a year, it will be much more work than if you do it monthly.
• Foreign Exchange Rates: Foreign exchange rates change, and if you’re doing business internationally, this will affect your bottom line. If you have an imbalance of revenue and costs in a certain foreign currency and the exchange rate fluctuates, you might make or lose money. Updating foreign exchange rates manually takes 2 minutes, and it could be easily automated. However, every time I manually update the foreign exchange rates, I also spend a few seconds thinking about what it means for our business. I doubt you could automate this task, too.
• Accounting: Of course, you have to bring your accounts up to date at the end of the month: Accruals, cross-checks, etc. If you do this thoroughly every month, you will have two benefits in one: First, you get a good gut feeling for your company’s financial situation. And second, you will discover accounting errors before they propagate.
• Cash Flow Management: Accounting gives you a rear-mirror view of your finances, but what you really need is a forward-looking forecast. Updating your cash flow plan at the end of every month improves forecast accuracy and helps avoid surprises.
• Investor Reporting: Last but not least, you need to inform your investors about the company’s progress and setbacks. The investor reporting is a condensation of all the financial month-end closing tasks described above. Regularly informing your investors about positive and negative developments builds trust, and you never know when you’ll need that trust.

2. Admin Checklist

Month-end closing is not just finance-related: There are a few other tasks worth doing every month.

• Absence tracking: I ask all our employees to report their absences once a month — holidays, sickness, military duty, mourning, etc. What might sound like overkill for a team of 20 is, unfortunately, necessary. I had to fire a co-founder who cheated on holiday allowance and sickness days. If you document all the absences every month, your life will be much easier if you run into an issue like this.
• Expiring contracts: Once a month, I check all customer and supplier contracts for their expiry and termination dates. This helps me avoid being caught by a contract expiry or missing a termination deadline to renegotiate an existing contract.
• Updating internal processes: If you’re ISO 9001 certified, you need to demonstrate ongoing updates to your internal processes. If you update your processes one day before your recertification audit, your auditor will notice, because your team doesn’t know the valid processes. If you do this continuously, it’s less work, and your team has time to adapt to new processes before the audit. The same goes for updating your risk list, which is also part of your ISO 9001 certification.

3. IT Checklist

And last but not least, there is IT. If you’re ISO 27001 certified, you need to demonstrate ongoing improvement of your information security management system. Here is what I do at the end of each month:

• Backups: Yes, it’s old-school to back up cloud tool data to a local hard drive. I do it anyway — you never know. It doesn’t take much time, but the benefits can be huge in case one of your key cloud providers goes belly-up.
• Cloud Costs: I manually track our cloud costs every month. This helps me to spot anomalies in resource consumption and avoid surprises down the road. Again, tracking costs can be automated, but the thinking of what cost changes mean cannot be automated.
• Vulnerability Reports: The internet is full of dangers, and those dangers change all the time. Running an automated vulnerability report once a month helps us spot all the packages and components of our SaaS application that need updating. Scanning is automated; assessing the risks and prioritizing the fixes is not.

Conclusion

Does it take lots of time to work through this month-end closing list? And is it fun to do so? No, and no; it’s not time-consuming, and it’s not fun. But it’s necessary.

And it takes much less time to do those tasks every month than automating them and running into surprises: You can automate the work, but not the thinking of what the changes since last month mean for your business.