Outsourcing month-end close: what Gulf finance teams should agree in writing

Outsourcing the month-end close is common across the Gulf, and the engagements that work are rarely the ones with the lowest fee. They are the ones where both sides wrote down what close means before the first month started. Below are the points worth settling in the engagement letter or the service schedule.

Scope, line by line. Close means different things in different companies. Write out which tasks belong to the provider and which stay in house: posting purchases and sales, bank and cash reconciliations, payroll journals, accruals and prepayments, fixed asset additions and depreciation, intercompany balances, revenue cut-off, inventory movements, and the management pack itself. Anything not on the list is assumed to stay with you, which avoids the most common argument in month three.

The calendar. Agree a close calendar with dates, not durations. A typical arrangement sets a date by which you provide bank statements and source documents, a date by which the provider delivers a draft trial balance, a window for your review, and a date for the final pack. Durations expressed as working days drift; dates do not. Decide in advance what happens when documents arrive late, because that is when a timetable actually gets tested.

Access and systems. Decide whose accounting system is used, who holds the administrator rights, and which users the provider needs. Keep ownership of your own ledger: a provider working inside your system leaves the data with you if the relationship ends. Agree how documents move, ideally through one shared folder or a document portal rather than email threads, and agree that the provider stores nothing outside it.

Review and sign-off. Name the person on your side who reviews and approves the pack, and name the reviewer on the provider's side. A close that is reviewed only by the person who prepared it is not reviewed. Ask for the review to be evidenced, and ask that a qualified accountant signs off before the pack reaches you. Agree what is in the pack: trial balance, profit and loss with comparatives, balance sheet, cash position, aged receivables and payables, and a short commentary on significant movements.

Reconciliation standard. Agree which accounts are reconciled every month and what evidence supports them. Bank, intercompany, VAT control, payroll liabilities and major receivable and payable control accounts are the usual list. Agree a threshold for unreconciled differences and the rule for escalating anything above it.

Year end and audit. State that the file is to be kept audit ready, with supporting schedules for each material balance, and agree who prepares the audit schedules and who answers the auditor's questions. Many disputes at year end come from an assumption that audit support was included when the fee was quoted for monthly bookkeeping only.

Confidentiality, data and people. Put a confidentiality agreement in place that covers the provider's staff, not just the firm. Agree where data is processed and stored and confirm it meets the requirements that apply to you. Ask for continuity: a named lead, a named backup, and notice before the team changes.

Fees and exit. Fix the monthly fee against the agreed scope and set out how out-of-scope work is priced, so one busy month does not turn into an invoice you did not expect. Agree a notice period and an exit plan: the provider returns the ledger, the working files and the reconciliations in a usable format.

None of this is complicated, but it is much easier to agree before the engagement starts than during a year-end audit. A short schedule covering these points usually pays for itself in the first quarter.

This article is general information, not advice. Contact us to discuss your situation.