Soft close vs hard close
Each, defined
Soft close
Soft close — A period state in which routine posting has stopped and only adjusting entries by a controller are accepted. In common usage also an abbreviated month-end that estimates rather than fully reconciles — directional numbers, never the basis for external reporting.
Hard close
Hard close — A close in which every step is done — reconciliations, accruals, review, sign-off — and the period is locked against posting, so its statements can go to lenders, investors and auditors.
Side by side
| Soft close | Hard close | |
|---|---|---|
| Speed | Days | Longer |
| Precision | Estimates allowed | Every account reconciled and reviewed |
| Period | Stays open | Locked |
| Audience | Management | Investors, lenders, auditors |
How they relate
Many companies soft-close most months and hard-close at quarter- and year-end, when statements go to investors, lenders or auditors.
What makes a hard close hard is the lock: once closed, nothing posts to the period. Corrections go to an open period as reversals.
Questions
- Is a soft-closed period locked?
- No. Entries can still land, which is why soft-close numbers are labelled preliminary.
- How often should a startup hard close?
- Monthly for management, quarterly or annually for anything leaving the company.
Definitions are the glossary’s, generated from the same documents. Figures in the examples are computed by tested functions, not typed. General information for US companies under US GAAP, not accounting or tax advice.