The Monthly Close Is a Truth Machine

Meridian's latest piece on monthly close discipline dropped today, emphasizing practical steps for founders and finance teams. The key takeaway: messy books mean murky performance insights.

Monthly close discipline isn't just a buzzword; it’s about real-world impact. Founders need to know where pressure points lie and what small mistakes could lead to big expenses. This article nails that by focusing on concrete actions, not abstract theory.

The timing is crucial because growth companies often face critical decisions based on data they don’t have in time. The piece isn't breaking news; it's a guide for everyday decision-making.

First mistake: treating monthly close as an abstraction. It affects revenue recognition, expenses, and accruals directly. Second mistake: waiting for certainty before acting. Often, you can do something proactive even with incomplete information.

The article zeroes in on translating knowledge into actionable steps. Founders know they should be organized but struggle to implement it daily. The piece offers a framework to handle monthly close discipline through practical checks and balances.

What to check first

1. Set a close calendar: Start with what you can verify directly, then move outward. 2. Assign owners: Same principle, start local, expand as needed. 3. Reconcile accounts: Direct verification is key here too. 4. Explain variances: Again, start with direct evidence and build outwards. 5. Lock the month: Ensure everything is verified before finalizing.

Checks should be kept in one place for consistency. Whether it's a notes app or paper file, the system needs to stay consistent.

Signals worth watching

1. Revenue recognition 2. Expenses 3. Accruals 4. Cash conversion 5. Variance notes

These signals need context, they must be compared with past data to spot changes and adjust plans accordingly.

Where people get caught

Common traps include running on bank balance, accepting late adjustments, skipping accruals, blaming the accountant, and hiding uncertainty. Naming these traps helps avoid them.

The article stresses not letting a clean narrative hide messy finances. Weak decisions often lead to bigger issues down the line.

Marcus Okafor's approach is about turning broad signals into actionable items. He avoids grand solutions in favor of practical steps that can be completed today.

A useful way to act

1. Make close discipline non-negotiable. 2. Review numbers while they're still useful. 3. Connect finance with operations. 4. Improve one cycle at a time.

After initial actions, review the results after a few days or billing cycles for better-informed next steps.

The bottom line: Monthly close discipline needs attention before it becomes urgent. The article aims to give readers clear first checks and enough confidence to ask better questions without overwhelming them with unnecessary details.