I’ve been debating for a while what my next blog should be about. There were plenty of GPUG Summit reviews and although I really enjoyed being part of the GP opening session, that didn’t seem like enough info above and beyond what everyone else was blogging to warrant another Summit blog. Then I considered a summary of one of the sessions I taught (using Management Reporter as a budgeting tool) but decided to wait on that one. Finally, I landed on year-end closing since the timing seems appropriate now.
First and foremost, the best thing you can do for your Dynamics GP year-end closing process is to keep an eye on Terry Heley’s year-end blog. This blog will include release info, closing steps per module and what’s being changed for year-end including form changes and bug fixes.
Beyond that, let’s look at:
When should I do my year-end close?
I often give my customers two types of answers for most questions – one that is based on “perfect consulting world” where we operate based on theory and book principal – and the other that is based on real world timing and experience.
In perfect consulting world, you do an inventory physical count on December 31st (or the last working day of the calendar/fiscal year) and then close all of your modules on the first working day after that.
(Go watch the video – truly funny for us bean counters https://youtu.be/MWM-qVkBzus)
In real world, the biggest driving factor on when to close your books are whether you’re using the payroll module in GP or not.
If you are using payroll, the best scenario is to close (at least the payroll module) after your last payroll of the calendar year and before the first payroll for next year.
But don’t fret if you can’t make that happen because the year-end closing steps provided by Microsoft will give you instructions on how to close payroll if you do have to get a new year payroll out the door before you close the current year. (I’m thinking this might be a good mini-blog topic to follow up with next month.)
Accounts Payable and Accounts Receivable
For these two modules, timing is definitely a challenge. The first step to sorting out when to close these modules is realizing what the close for these two modules actually does. Below is a screen shot of the Vendor Yearly Summary Inquiry (there is an equivalent window in AR). When you close these two modules, what happens is that anything accumulated in the Last Year bucket gets added to the Life To Date amount and anything in the Year To Date bucket gets moved to the Last Year bucket. The important thing to consider is that these buckets have been accumulating since the last time you ran a year end closing for these modules. So if you ran your 2017 year-end close on January 15th of 2017, the YTD bucket will actually include amounts from 1/16/2018 to whatever date you are now closing on.
And in case you’re wondering, changing your GP user date back to 12/31 will not help – the transactions entered have already hit these buckets and won’t be reversed out if you back date your system.
In perfect consulting world, you get all your AP/AR for the current year done by say January 3rd and you don’t enter any AP/AR for the new year until you’ve run your year-end close on January 3rd.
In real world, it is nearly impossible to ensure that you won’t have receive a prior year AP invoice 3 day after you close your AP. So just keep two things in mind:
- You can change your view in this window to be fiscal or calendar year and those choices are date sensitive. You can even set the default view for these windows in the Payables and Receivables Setup windows.
- If you use the Amounts Since Last Close view option, your best bet is to close the year as close to January 1st as you can. You will still likely end up with some prior year transactions in the buckets for that view, but it will give you the most accurate view.
There could be an argument made that you don’t actually need to close these modules since Microsoft added the date sensitive view options to these window. Historically, you needed to close the AP module to make sure the 1099 buckets were cleared for the new year. But the 1099 function has been date sensitive for at least 10 years now so unless you’re on GP v8 you should be good (other than the fact that you really need to upgrade because you are missing a ton of great functionality).
The most common misconception around year-end closing is that you can’t close your General Ledger until you’ve finished with all of the transactions for the year you’re closing. This misconception often leads to people scheduling their year-end close in March or April after their audit is finished. But keep in mind, you can always post GL entries back to the last closed year. So if I’ve closed 2017 but not 2018, I can still post entries back to 2016. As soon and I close 2018, I can still post entries back to 2017.
In GP2013 R2, a feature was added that will allow you to reverse a year end closing. Prior to that, we would consider whether you were finished with the prior prior year when planning your closing time. If you weren’t finished with 2016, we didn’t want to close 2017. But if you are on GP2013 R2 or newer, you can reverse a closing which would allow you to post back to older closed year. As a side note, if you don’t want to reverse your closing to make prior year entries, Alba Spectrum has a GP add-on that will let you make entries to prior closed years.
So there is no real reason to postpone closing your GL! By putting it off, you only make your financial reporting harder since you don’t get beginning balances until you do run the close process.
The next most common question is:
What order do I close the modules in?
For this question, the easy answer is to think through it from the mindset of the GP Integration Flowchart from the old GP training manuals.
Start at the top and work your way down! Of course, there will be considerations within your business that might change the flow a bit, but in general, this is a good plan.
There are no actual closing processes for Purchase Order or Sales Order, but year-end is always a good time to run Reconciles in those two modules. Once you’ve reconciled PO and SO, then close Inventory.
Payroll is not in the flowchart, but it covered above.
For the second row of modules, it doesn’t matter what order you close them in (no closing process for Bank Recon) as long as you make sure to close Fixed Assets completely before you close GL.
I’ve already given my opinion above about closing GL, so I think this is a good place to stop. I could probably write several more pages on year-end closing steps, concepts and tips but I’ll encourage you to read Terry’s blog and if you’re in Oklahoma, come see one of our December FREE Year-End Closing Seminars!