Monthly Close Best Practices for Growing Companies

Is your month-end close keeping pace with your growth? As technology and life sciences companies scale, the demands placed on the finance function increase dramatically.

New funding rounds, expanding headcount, multi-entity structures, complex revenue streams, stock-based compensation, grants, and evolving compliance requirements can quickly turn a manageable close process into a bottleneck.

A well-executed monthly close is the foundation for timely decision-making, investor reporting, board communications, cash management, and strategic growth. Internal best practice resources emphasize that an effective close strengthens controls, improves reporting accuracy, supports compliance, and provides management with a clear understanding of business performance.

Below are several leading practices that can help scaling technology and life sciences companies achieve a faster, and stronger close.

Standardize and Document the Close Process

One of the most common challenges in growing organizations is inconsistent execution. Create a formal close calendar that outlines:

• Key close activities (e.g., bank reconciliations, accruals, revenue recognition, consolidation, and financial statement preparation)
• Ownership and accountability (for each task, the preparer vs. reviewer should clearly be defined and identified)
• Due dates aligned to reporting deadlines (including internal and external deliverables)
• Review requirements (who reviews, level of review, and documentation expectations)
• Dependencies between tasks (e.g., reconciliations completed before posting entries, entries posted before financial reporting)

Best Practice: Develop a close checklist that is reviewed and updated at least quarterly as your organization grows.

Focus on Reconciliations Early

Account reconciliations should not be viewed as an afterthought. Ask yourself:

• Can every balance sheet account be supported?
• Are reconciling items researched and documented?
• Have significant month-over-month fluctuations been explained?

Best Practices:

• Reconcile all balance sheet and key income statement accounts monthly
• Attach supporting documentation
• Explain significant variances and adjustments
• Investigate unusual transactions promptly

Prioritize Revenue Recognition Reviews

For technology and life sciences companies, revenue recognition is often one of the most complex areas of accounting.

Technology companies’ common considerations include:

• SaaS subscriptions – Revenue is typically recognized over time as services are delivered (e.g., ratably over the subscription period), not upfront.
• Usage-based contracts – Revenue is recognized based on actual usage (e.g., transactions, API calls), which requires accurate tracking and cutoff.
• Professional services – Revenue depends on whether performance obligations meet the over time recognition criteria, and whether they are distinct from other deliverables.
• Multi-element arrangements – Contracts with multiple deliverables (such as a bundle of software, support, and services) must be separated if the performance obligations are distinct and revenue is typically allocated based on standalone selling prices.
• Deferred revenue balances – Ensure unearned amounts are properly recorded as liabilities and recognized as revenue in the correct periods.

Life science and biotech companies’ common considerations include:

• Milestone payments – Revenue depends on whether milestones (e.g., clinical trial phases, regulatory approvals) are achieved and whether they represent distinct performance obligations. Milestone payments may not depict satisfaction of performance obligations and improper timing can lead to premature recognition.
• Licensing agreements – Determine whether the license provides a right to use or a right to access IP, which drives whether revenue is recognized at a point in time or over time.
• Collaboration revenue – Arrangements often involve multiple parties and deliverables (such as funding, R&D, profit-sharing), requiring careful identification of performance obligations and allocation of revenue.
• Research service contracts – Revenue is typically recognized over time as research services are performed, requiring reliable tracking of progress and costs incurred.
• Grant funding – Assess whether grants are within or outside ASC 606 and ensure revenue is recognized based on eligibility requirements and allowable costs. Timing differences are common if conditions are not met.

Best Practice: Perform a contract and accounting review process monthly rather than waiting for quarter-end.

Improve Visibility Into Cash Burn and Runway

Cash management remains one of the most important metrics for venture-backed and growth-stage organizations. 

Monthly close should include:

• Cash reconciliation reviews – Reconcile all bank account balances to the banks’ records on a regular cadence to ensure cash balances are accurate and complete.
• Burn rate analysis – Monitor how quickly cash is being spent (monthly net cash outflows) to assess sustainability of operations.
• Forecast-to-actual comparisons – Compare actual cash flows and expenses to budget/forecast to identify variances and adjust projections. Auditors look at these variances closely, as they may reflect on management’s ability to forecast accurately.
• Covenant compliance assessments (if applicable) – Confirm the company is meeting any debt or investor requirements (e.g., minimum cash balances, financial ratios).

Technology and life sciences finance teams often rely on frequent fundraising, grants, or milestone-based funding. Accurate and timely close information enables management to make proactive decisions rather than reactive ones.

Best Practices:

• Develop a 12- to 18-month cash runway forecast as part of the monthly close process.
• Reconcile actual cash activity to forecast, analyze variances, and update assumptions related to revenue, fundraising, grants, headcount growth, clinical trial spending, and product development initiatives.
• Establish key liquidity metrics, including net burn rate, gross burn rate, and months of runway remaining, and present them to management and key stakeholders each month.

Stay Ahead of Equity and Compensation Accounting

Rapidly growing companies frequently issue stock options, restricted stock awards, and warrants, among other forms of employee compensation. In addition, headcount growth drives complexity around payroll, bonuses, and equity compensation accounting.

Best Practice: Create a recurring monthly review of new equity grants and compensation changes to avoid surprises at quarter-end.

Leverage Automation Wherever Possible

Manually updating spreadsheets often becomes a constraint as organizations grow.

Consider automating the following:

• Account reconciliations – Use tools to auto-populate balances, match transactions, and flag variances to reduce manual prep and review time.
• Journal entry workflows – Automate entry creation, routing, and posting to ensure consistency, proper approvals, and audit trails.
• Close task management – Track close activities through a centralized system with assigned owners, deadlines, and status updates.
• Approval processes – Implement automated approval hierarchies to ensure timely review and proper segregation of duties.
• Revenue schedules – Automate revenue recognition schedules (like monthly amortization) to ensure accuracy and compliance with ASC 606.
• Deferred revenue calculations – Systematically calculate and roll forward deferred revenue balances based on billing and recognition patterns.

Best Practice: Use of proper ERP systems and close-management platforms can significantly reduce manual effort while improving control and audit readiness.

Prepare Early for a Smoother Audit Process

The strongest close processes are designed with audit readiness in mind.

Key best practices include:

• Maintaining complete supporting documentation – Ensure every balance and transaction is backed by clear support (e.g., reconciliations, invoices, agreements) to facilitate audit testing and reduce follow-ups.
• Documenting accounting judgments and estimates – Clearly document assumptions and conclusions for complex areas (e.g., estimates, revenue recognition, warrants, and other employee compensation awards noted above) to support consistency and audit review.
• Retaining variance analyses – Keep detailed explanations of significant fluctuations to support analytical procedures and demonstrate that unusual trends were investigated.
• Updating accounting policies – Regularly review and update policies to reflect new transactions, standards, or business changes to ensure GAAP compliance.
• Reviewing lease, revenue, and equity schedules regularly – Keep key schedules current and accurate, especially in areas involving estimates or complex transactions, to support timely reporting and audit testing.

As companies scale, the monthly close transitions from a compliance activity to a strategic business process. Finance leaders who invest in strong close procedures, automation, and disciplined review processes gain better visibility into performance, improve stakeholder confidence, and create a foundation for sustainable growth.

Remember: A fast close is valuable, but an accurate, repeatable, and scalable close is what truly supports long-term success.

Need Help Evaluating Your Close Process?

Our technology and life sciences accounting professionals help organizations streamline close activities, implement scalable processes, enhance controls, and deliver timely financial insights that support growth, fundraising, compliance, and strategic decision-making. Connect with our team today.