The worst close I have ever seen was six months overdue.
It was a non-profit. The board wasn't even able to project how much bonus to disburse, as the accounts for the financial year weren't closed.
That's an extreme case. But it raises the question: how long should it take to close the books each month?
The short answer: the multinationals (MNCs) I was with closed by the eighth working day after month-end, and HQ later tightened that to the fifth. At the slow end, I have anecdotes of SMEs taking sixteen to twenty working days, and beyond. There isn't a single "best" target, but in my opinion faster is better, because a directionally correct close is better than no close at all.
If the term is new to you, the month-end close is the routine of getting every sale, cost and payment for the month recorded and checked, so that month's numbers can be reported and trusted.
How a Multinational Closes
In my regional and international roles, close timelines were measured in working days, or WD for short, counted from the first working day after month-end. The MNCs I was with started at WD5 and WD8. It seems they usually reported topline sales and revenue first, by WD5, and gave the finance and operations teams until WD8 to finish closing the operating expenses (opex). As part of standardisation mandates from HQ, those were later tightened to WD2 and WD5.
They also practised a form of "Flash" reporting: a high-level, pre-close sales estimate that was mandatory on WD1.
Our regional monthly closing calendar had to consider the local holidays and special events specific to each affiliate, or country. That meant understanding that Fridays and Saturdays were non-working days for most of our Middle East affiliates, and catering for Golden Week holidays in Japan and China, which can last a week or so.
MNCs suffer from complexity that no amount of glocalisation can fully compensate for. (Glocalisation is the practice of adapting global products and processes to local cultures, laws and preferences; here I'm using it to describe the standardisation of policies and processes across countries.) Despite an MNC's best efforts at standardisation, monthly and quarterly reporting to HQ for investor relations often meant a deadline was a deadline, regardless of local norms. Local teams had to stand by to cover the close during a holiday, remotely or, in the worst case, in person, with teams "drawing straws" or finding the most equitable way to staff it.
I wrote more about that MNC discipline in what MNCs get right about forecasting.
Why SME Closes Run Late
SME closing windows can be broad. I have anecdotes of companies with a WD16 to WD20+ close. There are many reasons that might result in a late close.
The accountant isn't in the building. Many SMEs rely on a third-party accountant for their closing work, and since that accountant isn't in-house, there's a great deal of back-and-forth Q&A leading up to the close. If there is an in-house accountant, he or she might be swamped with manual work for lack of automation, with a backlog that causes the time lag.
The receipts aren't in. Without enforced SOPs over expense and claims submission, the finance department waits for the last few staff to submit their receipts, and the close drags on. It's very common for the founder or team members to struggle with producing receipts for claims and expenses on time.
The money leaves by too many doors. Expense payments in an SME are very diverse, and they aren't consolidated in a single ERP system the way they are at an MNC, which uses large, expensive but integrated systems for procurement and staff claims. An SME might have staff using their own credit cards for purchases and submitting manual forms to be reimbursed for their transport, meals and other expenses. Founders or key stakeholders may hold on to corporate credit cards whose statements come in at different times of the month. They might write company cheques to settle big purchases (thankfully corporate cheques are being phased out by the end of this year!), or use their own personal credit cards to pay for subscriptions (this is not uncommon), submitting the invoices when they remember to, sometimes months later.
These are all common reasons for a delay in closing, and they can be virtually impossible to prevent, given the degree of firefighting and hustling that takes priority over financial reporting and accuracy.
Fix the Why First
Fixing the "why" always comes first. SME business owners all have a built-in priority matrix for firefighting and troubleshooting company issues, but the month-end close is usually not at the top of the list. The key to fixing the close is first to highlight its importance.
What a Late Close Really Costs
A late close means zero decision-making capability until it is too late. It means low visibility on what is coming in and what is going out, and poor visibility on cashflow, which is critical for any business. It often leads to information paralysis — not from an influx of information, but from the lack of it.
From the perspective of a VC or potential partner, a perpetually late close casts doubt on a business owner's organisational ability and on the entity's financial governance. It's a red flag that warrants closer scrutiny.
A timely close, on the other hand, builds confidence and enables timely decision-making. It allows for a quick OODA loop (Observe, Orient, Decide, Act) for steering the business in the right direction, and it provides the agility to pivot once small changes in the internal or external environment are detected, especially against the base assumptions you used to chart the company's course for that financial year. It allows founders to answer questions such as "How much?", "How far?" or "How soon?", all of which are impossible to answer if the accounts aren't closed.
Faster Beats Perfect
Closing accuracy also matters, so business owners should understand the trade-off between timeliness and accuracy. Getting the figures 95% correct and on time beats getting them 100% correct and late, purely because the 95% correct information would have allowed you to make an informed decision in time, versus a guess in the latter case.
If you think about it, unless you have a strict quarterly reporting deadline or an investor breathing down your neck, letting several small expenses (under $1,000 in aggregate) spill over into next month doesn't move the needle in terms of cashflow forecasting. Neither will it cause you to burst the financial covenants you owe to the bank.
So that staff claim you're waiting on? It may be prudent to enforce a strict SOP that allows claims up to a maximum of three months late, and rejects anything that comes in later than that.
When the Accountants Push Back
No founder has ever rejected a faster close. Their in-house or third-party accountants may push back, but once the workload has been quantified by hours and complexity, and automation has been put in place, they have no choice but to admit they could have closed the books earlier.
This is the case for a fractional CFO or an in-house finance lead: someone who understands the planning norms of finance and is able to hold accountants accountable (no pun intended) for their service quality and timeliness. Without that person, the accountants can easily drag things out for the sake of completeness or accuracy.
Why Close Monthly at All?
The closing process is akin to a yearly spring-cleaning, split into twelve smaller parts.
Users of the financial statements, such as bankers, investors and business owners, usually take a yearly view as they assess a company's performance. What is important is the period: 1 January 2026 to 31 December 2026, assuming a December year-end. This means that so long as the books are tidied up by the time the financial statements are presented, it doesn't matter how many times the accountants have closed the books throughout the year. In fact, some companies are small enough for a yearly close: they submit all their receipts and invoices at the end of December, and the accountant works once and closes the books once.
Then why should anyone bother closing their books on a timely and monthly basis?
Back to the spring-cleaning analogy. If you tidy up your house on a monthly basis, chances are that when friends or visitors come over, your house looks neater and they can find their way to the kitchen without tripping over stuff. They'll likely compliment you on how neat and tidy you are, and you'll score brownie points and leave a good impression. More than that, you yourself benefit from a clean and conducive environment to live in.
This parallel between your house and your company is a good starting point for thinking about monthly closing. The later you close your books, the untidier it gets, and the mess snowballs until it's literally unbearable to live with, or live in.