There are many ERP users out there that shudder at the following four words: year end closing process. It conjures up images of system crashes, trial balances not balancing and general financial mayhem!
In reality, it need not be a process to be feared, but rather a seamless, uneventful occurrence in Microsoft Dynamics GP. With Microsoft Dynamics GP being an open balance system, the main reason for rolling over the financial year is to create opening balances on the balance sheet accounts and to close off the profit and loss accounts to the retained earnings account.
A commonly asked question is “When is the best time to roll-over? Must I wait for the final adjustments from the auditors?” With Microsoft Dynamics GP you have the ability to post to the previously closed financial year and the system will automatically update the balance sheet balances and make the necessary adjustments to the retained earnings account. So, really, the answer is the sooner the better, so that your financial reports for the current year display correctly.
Below are 5 points that highlight some basic steps that you can do to ensure that you have a smooth, simple roll-over:
1. Back-up, back-up, back-up. It sounds simple enough, but can easily be overlooked. Always ensure you have a SQL backup before starting your year end process. My recommendation would be to make a backup before and after you run your file maintenance. Depending on the number of companies you have and the size of the databases, file maintenance can take a while, so if you have a backup after file maintenance and something goes wrong in your year end roll over, at least you will save time by not having to run your file maintenance again.
2. Click OK and walk away. One of the first steps in the year end rollover is to run the file maintenance procedure of Check Links. As mentioned above, this can be quite time consuming if you have sizeable databases. What you can do, to limit downtime to users, is select all the modules at once and click OK and then leave the Check Links to run overnight.
3. Beware and compare. Once again, such a simple step that many forget to do. Make sure that you have your profit and loss, balance sheet and trial balance as at the end of the financial year that you are rolling over. It makes life so much easier if you have them on hand and already have an idea of what the amount going to the retained earnings account should be.
4. To clear or not to clear. Another tip that really helps things run smoothly is to make sure that your chart of accounts is setup correctly before rolling over. In other words, making sure that balance sheet accounts and profit and loss accounts have the correct posting type so that they either carry forward a balance or clear to the retained earnings account. The easiest way to do this is via SmartList. Most companies have a chart of accounts with clearly defined ranges for each of these account types.
In the example below, account range 1000 – 3999 are the balance sheet accounts and 4000 – 9999 are the profit and loss accounts. So, you will setup two SmartLists. The first screenshot depicts the filters for the balance sheet SmartList and the second one for the profit and loss. You will notice that in the balance sheet range, I am looking for profit and loss accounts and vice versa in the profit and loss accounts. If all the setup is correct, these two SmartLists should yield no data:
5. Rolling, rolling, rolling. The final tip to a smooth rollover is the order in which you close off the modules within Microsoft Dynamics GP. The main rule you need to follow is sub ledgers first and the general ledger last. The reason that we close the sub ledgers is mainly for reporting purposes, so that when we are looking at enquiry screens that show us prior year and year to date information, it is accurate. In the fixed assets, you are not able to process the first month in the new financial year if you have not done the rollover, as it updates your financial year allocated to fixed assets. The order of the sub-modules is not set in stone, but generally I would recommend closing off inventory, purchasing, sales, fixed assets and then the general ledger.
I hope that this blog has helped put your mind at ease and eliminated some of the year end close gremlins. However, always remember that when in doubt, there is always a friendly helpdesk team member at the end of the phone who will be more than willing to hold your hand and get you safely to the other side.
You can read more about Professional Advantage and Microsoft Dynamics GP here.
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