Getting ready to close the fiscal year with success

Abacum's CFO Jorge Lluch
Jorge Lluch

, Co-Founder & COO, Abacum

8 min read · Published: January 11, 2024


In the world of finance, few things are as crucial as a smooth year-end close, and having approved budgets for the coming year. It is a time when businesses meticulously review their financial records, reconcile accounts, ensure compliance with tax regulations, decide on budgets and fix targets for the next year.

The average finance team takes 25 days to complete their annual close, however the risk of taking longer is very real. This can have several critical down-stream implications, as teams rush to deliver on deadlines that can not be moved such as their annual audit, all while increasing the likelihood of errors.

That’s why, together with the team at Rillet, we have created the ultimate guide to help you navigate this critical period with ease and confidence. After all, year end closing is like an exam, the more you procrastinate it, the more problems it can create. To make sure that is not the case, let’s get started!

Define your process

When it comes to the annual close process, efficiency is key. Which is why it is important to acknowledge that closing the financial year is not a one-person project. 

To start the journey towards a smooth close, make sure you define the process, and make a checklist of everything you need to complete. Then start by working backwards from your fiscal close date, establishing clear target dates to avoid missing any critical deadline. 

There will be a lot of moving pieces, so we have included below some of our key suggestions to help you get ready to close the books.

Kicking off

1. Gather the team

As the information needed to close your financial statements comes from various sources, inform, and align your team about the closing schedule ahead of time and provide them with tangible deadlines. It is always a good idea to look at last year’s process to reflect on what went well and what could be improved this time around.

2.  Determine your closing schedule

Be clear on what the important dates are, and the activities that need to be delivered by each of those deadlines. Some of the key deliverables should include reporting and data processing deadlines, as well as your fiscal close date.

Preparing your balance sheet

Preparing your balance sheet is the perfect opportunity to understand if your business will finish the year in a good financial position. To help you do that, these are some of the accounts we suggest spending most of your time focused on.

1. Cash

At a startup cash is the lifeline of your business. Make sure you have a clear list of all your bank accounts, the reason behind using them, and if money is sitting in a foreign bank account be ready to prepare your FBAR for tax compliance. You want to make sure you reconcile all your cash accounts and record adjusting entries. 

2. Accounts receivable

This is one of the most important accounts in every business. However, it can also be the most challenging to close, as it is directly connected to revenue (this gets more complicated when you have usage based revenue) and your cash collection process. 

It is important to ensure that all records of money coming into your business match what actually occurred, and if there is a balance outstanding, you create adjusting entries to the original journal entries. To help you do this, it is important to review the estimates related to bad debts and provision for any losses coming from your customers. 

3. Investments

If you are a venture backed business that has raised a significant amount of funding, it is likely you have a treasury management policy and therefore a portfolio of investments. Make sure you review the different considerations and financial reporting disclosures for each of them.

4. Accounts payable and accrued liabilities

You need this to close the books, and this is more of a team sport than finance doing the work. Ensure the company understands what is required and give them enough time to submit their invoices. Be ready to adjust for delays, or leverage automation to categorize your invoices properly. 

5.  Equity

Equity can be one of the most important sections of the financial statement. It directly drives your 409a-valuation, is connected to your cap table, and how you compensate your employees with stock options. Make sure to pay important attention to how you reconcile your accounting ledger with your cap table, as well as making sure you review any equity transactions with your legal counsel. 

Having a clean balance sheet is the sign of a good controlling function, and sets the future foundations for a successful audit. While you always want to be establishing the right accounting policies throughout the year, competing priorities can often creep up. Use the end of year close as an opportunity to do any cleanup work required – you will not regret it down the road. It’s also generally a best practice to have a supporting schedule or the correct documentation that supports the balances for each of these accounts. Reconciling and documenting at year end will save lots of time when the audit rolls around.

Preparing the income statement 

The annual close of your income statement is normally a pretty straightforward process. Especially if you have invested in making sure your month end process is fairly automated. When getting ready to prepare the profit and loss for the fiscal year end, these are some of the major considerations you can keep in mind. 

1. Revenue

Start by looking at the different revenue lines within your business. This is an opportunity to ask yourself whether you are recording revenue on a gross or net basis, and more importantly, understand the rationale behind this choice. Spend some time unraveling the nuances of your revenue recognition policy for each line, and lastly pay careful attention to any categories labeled as “miscellaneous revenue” or “other revenue,” and assess whether reclassification or documentation is warranted for clarity and transparency in your financial reporting. 

2. Cost of Goods Sold

Your investors likely obsess over your gross margins the same way you do, it is after all a clear metric that can impact the potential profitability of your business. Spend time gaining clarity on your company’s cost structure and examining the mapping of professional services or products, and making sure there is a clear connection between what your financial model classifies as COGS and what you are actually including from an accounting perspective. 


Understand your operating expenses by scrutinizing their categorization. Most companies (including us), classify their expenses into functions like Sales and Marketing, Research and Development, and General and Administrative. It is important to ensure you have consistency in mapping your expenses throughout the year, verifying that your vendor invoices are consistently booked in the same account. You can also prioritize a meticulous payroll reconciliation, considering it’s a significant and predictable expense, that can however become more complex if your business is global and hires through employment of record companies. Lastly, ensure accuracy in non-expenses such as depreciation and amortization, which become crucial for tax purposes. 

4. Other income and expenses

Spend time examining the “below-the-line” accounts on the income statement, they are usually subject to audit scrutiny, and should strictly comprise items outside the company’s operational functions. Specifically, if interest or dividend balances are present, verify their accurate presentation. Make sure to stay updated with the latest US GAAP guidance to determine the appropriate recording location for extraordinary expenses like restructuring costs and severance payments. Reviewing this not only ensures precision for below-the-line balances but also guarantees compliance with accounting standards for transparent financial reporting.

Getting everything finished

There are a lot of steps involved in preparing the annual close – it is critical you continue to work backwards with your team and stakeholders to make sure everything continues to run smoothly and on time. Therefore, our most important advice for getting everything done:

  1. Start preparing early and working backwards so that you can solve any discrepancies ahead of time.
  2. Automate your processes as much as you can to eliminate human error and manual work.
  3. Not everything should be done by the finance team, be clear on what you need from the rest of the business, while being realistic on the resources available, and the roles and responsibilities you are assigning.
  4. If you are already running a smooth month-end close process by the time you reach year-end you have already done most of the work required. Do the work early.

Stay ahead during 2024

As you finish closing the year and think about how to get ahead of your accounting, we’ve seen many companies use Rillet – a new accounting platform built for SaaS companies. Rillet syncs with existing platforms like Stripe, Salesforce, Hubspot, payroll, and AP platforms to automate financial statement preparation and reduce the average close cycle by 70%. They also use the financial source data to create drillable SaaS metrics and clean accounting that you can easily plug into Abacum for planning and budgeting.

Great FP&A starts with clean accounting data

Closing the historical performance of your business is a good opportunity to remember the importance of having strong foundations and clean accounting data for FP&A. Especially as with strong data foundations, the FP&A function can quickly and effectively leverage the “past” to enable and drive better insights into the future.

This is how solutions like Abacum are empowering CFOs to drive efficient growth with revenue forecasting, headcount planning and OPEX budgeting. More importantly, Abacum can help the finance team shift from quarterly to monthly rolling forecasts, making sure every CFO always has a “what-if” plan in place.  

The finance tech-stack is evolving and solutions like Rillet and Abacum are empowering CFOs and finance leaders to drive better decisions while automating the manual processes of the function.

Request a demo now to see our product live and start your finance transformation journey.

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