# Monthly close process

The monthly close process integrates Hardfin's operational data with your financial close procedures. This workflow ensures accurate financial reporting while maintaining operational flexibility. Hardfin operates as [an asset subledger for accounting](/run-financial-operations/accounting.md), as well as a [real-time operational tool for asset tracking](/bridging-operations-and-finance.md).

## Overview

The Hardfin monthly close process follows a structured five-step workflow that guides controllers and finance teams through reviewing operational changes, validating journal entries, and locking period balances. Each step provides visualization, detailed journal entry review, and approval tracking to ensure complete and accurate financial reporting.

### Accessing the accounting close workflow

To begin the monthly close process, navigate to the [Accounting page](https://assets.hardfin.com/accounting). The Accounting page provides access to reports and worfkflows relevant for accounting purposes, including the monthly close workflow and prior period review. You can access the monthly close workflow by clicking on the "Close workflow" button under "Period review and close" in the bottom right.

### Accounting period selector

The monthly close workflow displays an accounting period selector that shows all available periods for your organization. Each period displays:

* **Period name** - The month and year (e.g., "July 2025")
* **Period status** - Whether the period is unlocked (available for close) or locked (already closed)
* **Lock date** - For locked periods, the date when the period was locked

Select a period from the list to begin or continue the close workflow for that period.

{% hint style="info" %}
**Note:** Periods must be locked in order. You cannot lock a period until all prior periods have been locked. Future periods are disabled until the current period is locked.
{% endhint %}

## Accounting period review

The **accounting period review** page provides a centralized view for managing your accounting periods. Navigate to this page from the accounting section to see all periods at a glance.

The period review page displays:

* **Period status** - Whether each period is open, in review, or locked
* **Review progress** - Completion status of each review step within the period
* **Key metrics** - Summary of inventory and fixed asset balances for each period
* **Action buttons** - Quick access to start or continue the review process for each period

From this page, you can select any period to begin or continue the monthly close workflow. The page helps finance teams track which periods are ready for review and which have already been completed.

## Step 1: Verify all details recorded

**Goal:** Confirm all transactions have complete accounting information before beginning the close process.

Before reviewing any [journal entries](/run-financial-operations/accounting/journal-entries.md), verify that all operational transactions for the period have the required accounting details allocated or completed. This includes:

* Cost basis information for inventory purchases
* Capitalization details for deployment costs (if needed)
* Depreciation policies for asset deployments
* Disposal accounts for sales and scrap transactions

**Exception report:** Hardfin provides an exception report showing any transactions with missing accounting details. The report allows you to enter missing information directly before proceeding with the close.

{% hint style="warning" %}
Transactions with incomplete accounting details may result in missing journal entry lines or incorrect balances. Complete all required fields before proceeding to Step 2.
{% endhint %}

## Step 2: Review inventory rollforward and entries

**Goal:** Confirm Hardfin's operational flow and the resulting three inventory-related journal entries.

{% hint style="info" %}
The **inventory to fixed assets journal entry** is reviewed as part of the fixed-asset rollforward in Step 3, not the inventory rollforward, because it can include deployment capitalizations.
{% endhint %}

### Inventory rollforward

The [inventory rollforward](#inventory-rollforward) provides a waterfall visualization showing the flow of inventory through the period:

**Waterfall visualization:** Start → Added → Deployed → Sold → Scrapped → End

**Headline metrics:**

* Opening balance
* \+ Added
* \= Total
* \- Deployed (inventory capitalized to fixed assets)
* \- Sold
* \- Scrapped
* \= Ending balance

### Linked inventory journal entries

Below the rollforward chart, review the associated journal entries:

| Journal ID              | Type                | Description              | Example                                                                                                  |
| ----------------------- | ------------------- | ------------------------ | -------------------------------------------------------------------------------------------------------- |
| HF-JE-INV-NEW-YYYY-MM   | Inventory purchases | Additions from new units | [Example journal entry](/run-financial-operations/accounting/journal-entries.md#je1-inventory-purchases) |
| HF-JE-INV-SALE-YYYY-MM  | Inventory sales     | Sales of goods           | [Example journal entry](/run-financial-operations/accounting/journal-entries.md#je4-inventory-sales)     |
| HF-JE-INV-SCRAP-YYYY-MM | Inventory scrap     | Write-offs               | [Example journal entry](/run-financial-operations/accounting/journal-entries.md#je5-inventory-scrap)     |

**User actions:**

1. Export each journal entry for detailed review
2. Review each journal entry for reasonableness (amounts, SKUs, account mappings)
3. Mark each journal entry as "Reviewed ✅" once validated

{% hint style="success" %}
**Controller's review goal:** Confirm operational changes make sense and nothing is missing.
{% endhint %}

## Step 3: Review fixed-asset rollforward and entries

**Goal:** Confirm Hardfin's asset rollforward and the four fixed asset-related journal entries.

{% hint style="info" %}
The **inventory to fixed assets journal entry** is reviewed here as part of the fixed asset-rollforward, not in Step 2, since it may include deployment capitalizations.
{% endhint %}

### Fixed-asset rollforward

The [fixed-asset rollforward](#fixed-asset-rollforward) provides a waterfall visualization showing the flow of fixed assets through the period:

**Waterfall visualization:** Start → Additions → Depreciation → Disposals/Scrap → End

**Headline metrics:**

* Opening net book value (NBV)
* \+ Added from inventory
* \+ Capitalized from deployment
* \= Total
* \- Depreciation
* \- Sold
* \- Scrapped
* \= Ending net book value (NBV)

### Linked fixed-asset journal entries

Below the rollforward chart, review the associated journal entries:

| Journal ID             | Type                      | Description             | Example                                                                                                                      |
| ---------------------- | ------------------------- | ----------------------- | ---------------------------------------------------------------------------------------------------------------------------- |
| HF-JE-INV-FA-YYYY-MM   | Inventory to fixed assets | Capitalizations         | [Example journal entry](/run-financial-operations/accounting/journal-entries.md#je2-inventory-to-fixed-asset-capitalization) |
| HF-JE-DEPR-YYYY-MM     | Depreciation expense      | Monthly depreciation    | [Example journal entry](/run-financial-operations/accounting/journal-entries.md#je3-depreciation-expense)                    |
| HF-JE-FA-SALE-YYYY-MM  | Fixed asset sale          | Disposals with proceeds | [Example journal entry](/run-financial-operations/accounting/journal-entries.md#je6-fixed-asset-sales)                       |
| HF-JE-FA-SCRAP-YYYY-MM | Fixed asset scrap         | Retirements and scrap   | [Example journal entry](/run-financial-operations/accounting/journal-entries.md#je7-fixed-asset-scrap)                       |

**User actions:**

1. Export each journal entry for detailed review
2. Review each journal entry for reasonableness (amounts, SKUs, account mappings)
3. Mark each journal entry as "Reviewed ✅" once validated

{% hint style="success" %}
**Controller's review goal:** Confirm operational changes make sense and nothing is missing.
{% endhint %}

## Step 4: Review adjustment entry (if applicable)

**Goal:** Reconcile any prior-period deltas and approve Hardfin's consolidated "prior-period adjustment" journal entry.

The adjustment entry captures any differences between Hardfin's current operational balances and the locked balances from the previous period close. This entry ensures your GL stays in sync with operational changes that may have been entered after the prior period was locked.

For example, if you sold a fixed asset in the prior period, but the sale was not recorded until after the prior period was locked, the adjustment entry will automatically handle truing up the gain or loss on the sale.

### Adjustment journal entry

Review the adjustment entry if prior-period differences exist:

| Journal ID           | Type       | Description                   | Example                                                                                                       |
| -------------------- | ---------- | ----------------------------- | ------------------------------------------------------------------------------------------------------------- |
| HF-JE-ADJUST-YYYY-MM | Adjustment | Reconcile prior-period deltas | [Example journal entry](/run-financial-operations/accounting/journal-entries.md#je8-prior-period-adjustments) |

If no prior-period differences exist, the system displays: "No prior-period adjustments required ✅"

**User actions:**

1. Export the adjustment entry for detailed review
2. Review the adjustment entry for reasonableness (amounts, accounts)
3. Mark the adjustment entry as "Reviewed ✅" once validated

{% hint style="success" %}
**Controller's review goal:** Confirm the adjustment entry is reasonable and nothing is missing.
{% endhint %}

## Step 5: Confirm posting and lock period

**Goal:** Final approval to freeze all balances and establish the new baseline for the next period.

### Period review summary

Before locking the period, you will be able to review a comprehensive summary of all completed steps.

An example of this summary includes:

```
📔 Period review summary: July 2025
  ---------------------------------------------------------------
  ✅ Inventory rollforward & journals ............ Reviewed
    ✅ New inventory purchases ................... Reviewed
    ✅ Inventory sales ........................... Reviewed
    ☑️ Inventory scrap ........................... None
  ✅ Fixed asset rollforward & journals .......... Reviewed
    ✅ Inventory deployments ..................... Reviewed
    ✅ Depreciation .............................. Reviewed
    ☑️ Fixed asset sales ......................... None
    ✅ Fixed asset scrap ......................... Reviewed
  ✅ Adjustment entry ............................ Reviewed
  ---------------------------------------------------------------
🏁 All reviews complete
```

### Period locks computed

Review the exact balances that will be locked for each account as of the period end date. An example of this summary includes:

```
🔍 Period locks computed: as of July 31, 2025
  ---------------------------------------------------------------
 |  Account                      |  Lock type  |  Value ($)      |
 |-------------------------------|-------------|-----------------|
 | Inventory                     | Balance     |      16,212.98  |
 | Inventory clearing            | Balance     |           0.00  |
 | Cost of goods sold            | Cumulative  |   1,218,400.00  |
 | Inventory write-offs          | Cumulative  |      47,900.00  |
 | Capitalized deployment costs  | Cumulative  |     (84,300.00) |
 | Fixed assets                  | Balance     |   9,909,121.10  |
 | Accumulated depreciation      | Balance     |  (1,780,600.00) |
 | Depreciation expense          | Cumulative  |     620,000.00  |
 | Asset disposal clearing       | Balance     |           0.00  |
 | Gain on disposal              | Cumulative  |      19,500.00  |
 | Loss on disposal              | Cumulative  |      34,200.00  |
  ---------------------------------------------------------------
🕓 Period lock ready
```

### Confirmation and signature

Before locking the period, you must provide confirmation and signature. An example of this summary includes:

**Required confirmation**

☑️ I confirm that all Hardfin journal entries for July 2025 have been posted and approved in the company's general ledger.

**Optional notes**

Enter any notes about the period close for future reference (e.g., "Late shipment for $50,000 will appear in next period's adjustment entry").

**Required signature**

Enter your name to provide an electronic signature for the period lock.

{% hint style="warning" %}
Locking this period will freeze all Hardfin balances as of July 31, 2025. Any subsequent operational changes to prior periods will appear as prior-period adjustments during the next close.
{% endhint %}

**User actions:**

1. Check the confirmation
2. Enter any notes (optional)
3. Sign your name for the e-signature
4. Click "Confirm & lock period" to complete the period close

### Post-lock behavior

Once the period is locked:

* Hardfin snapshots every account and SKU balance as of the period end date
* The system records the approver name, date/time, and any notes entered
* Electronic signature text is captured and stored for audit purposes
* The period displays as "Locked ✅ July 31, 2025" throughout Hardfin
* Any operational changes dated on or before July 31 will be automatically routed to the "prior-period delta" report for the August close


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