Definition
Financial close is part of every company's financial process that involves verification and adjustment of account balances at the time that an accounting cycle comes to an end (mostly quarter ending or year ending). This process helps in generating financial reports that give insight into the company's financial position for the period. These reports are used by investors, stakeholders, creditors, and even regulatory authorities to check on the company's financial health.
Example
Financial close generally refers to month-end close, quarter-end close or year-end close.
Why it matters
Financial close is an important business process that gives a snapshot of a business’s financial health. Every company must ensure to close its books within the financial close. Any delays and lack of processes may act as a hindrance in achieving timely and accurate financial information about the company. To ensure timely and appropriate financial close, companies may focus on aspects like process improvements, automated accounting software, etc.