Continuous Accounting vs. Monthly Close
Moving from "End of Month" crunch to real-time books. Implementing automated accruals, daily soft-closes, and continuous validation.
Traditionally, accounting is a batch process culminating in the "Month-End Close", a stressful week of spreadsheets and manual adjustments. "Continuous Accounting" is an architectural paradigm where the ledger is always in a "Soft Close" state. By automating accruals and reconciliation in real-time, the "Close" becomes a reporting timestamp, not a workflow event.
Automating Accruals
The Old Way: Wait for the $10,000 AWS invoice on Day 30, then book the expense. P&L looks great for 29 days, then crashes.
The Modern Way: The system estimates daily usage (via API) and books a daily journal entry: Debit: Hosting Expense | Credit: Accrued Liabilities. When the actual invoice arrives, the system reverses the accruals and books the final invoice. This smooths the P&L curve.
The Daily Soft Close
The system runs a nightly "Integrity Check" job:
Verify Assets = Liabilities + Equity.
Verify Bank_Balance == Internal_Ledger_Balance (Recon).
Verify Intercompany_Net == 0.
If these pass, the day is "Closed." If not, alerts fire immediately. This prevents errors from compounding over 30 days.
Frequently Asked Questions
Common questions about this topic
QDoes this require an ERP?
Continuous accounting usually happens in the Operational Ledger (the fintech backend) which feeds the ERP. Legacy ERPs are often too slow for this level of granularity.
QWhat is the benefit to the CTO?
Data visibility. You know your unit economics and margins today, not 20 days after the month ends.
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