Small and mid-size businesses have endless potential to simplify their business processes with the utilization of SAP Business One. Period End Closing is one of the most important aspects to running a business. Period End Closing occurs at the end of the year is often another challenge at an already exhausting time. Read on to learn what Period End Closing entails, the specific tasks, some fast facts, how to leverage automation, and how SAP Business One Accounting can simplify the end of the fiscal year.
A Summary on Period End Closing and Sub Periods
The tasks associated with annual financial statements and sub periods make up Period End Closing. The sub periods associated with the process typically occur monthly. However, the length of the sub period can vary by company preference. The tasks that occur with Period End Closing will repeat during each sub period. Closing sub periods simplifies period end closing. While there are certain tasks that all companies perform, tasks vary from one company to another. Therefore, the detailed process is known and mastered by only one or two key employees which can lead to a critical situation in case of unexpected departure.
The typical steps in a Period End Closing are:
- Period Closing: The closing step is the movement from one sub period or period to the next. At this point the posting status is changed to “Period Closing” this allows accountants to continue with the other tasks.
- Period End Tasks: The major activity at this step is reconciliation. Reconciliation occurs in verifying inventory, revenue, relevant accounts, and balance sheets.
- Period End Closing Utility: Up until now, only the status of the period has been closed. One must run the Period End Closing utility in SAP B1 to completely close the period at this point. SAP Business One will then zero Profit and Loss accounts and move the balances to Retained Earnings.
- Locking: Finally, the period is locked. This is a function in SAP Business One that makes sure no other changes are made. No one will be working in the wrong sub period or period.
To Close or Not to Close a Sub Period?
Some may choose to focus only on the Period End Closing. There are many items and actions in sales cycles and product lifecycles that may fall in the few days that bridge a sub period. Many will perform the closing tasks of reconciliation without closing and locking. This is to avoid potential conflicts in the subsequent days of the month-long sub period.
- SAP Business One Tip: To close and lock the sub period, use the setting “Period Status: Unlocked Except Sales.” This means that late documents and purchases can still be recorded, and the sub period can be closed after.
Closing Sub periods
One may choose to close and lock a sub period. They will simply perform the tasks previously listed. Whether a company closes and locks the sub period is entirely based on business practices, industry, the volume of clients/orders, and inventory models. Each small to mid-size business has different needs. SAP Business One Accounting simplifies the end of the fiscal year and allows the professional to adjust the ERP system to individual needs and create standardized processes.
End of the Fiscal Year
Upon reaching the end of the fiscal year, the internal and external reconciliation aforementioned include:
- Many postings: Review all transactions at the end of the period to ensure that everything is correct. Then, post the pending journal entries and vouchers.
- Reports: SAP Business One gives the ability to print all reports associated with year-end tasks, this includes the trial balance, inventory audit, and all other financial statements
- Open Items: Review of the open items and address open documents.
- Backups: To protect business information, the company may choose to back up the SAP Business One database at this point and place the data in their on or off-site storage.
- Create and denote the new fiscal year: Create a new fiscal year now that the previous has closed.
While many are averse and aware of the associated issues that tend to correspond with the closing of a fiscal year, Period End Closing should be a process of relative simplicity, particularly when running SAP Business One.
Streamlining Period End Closing Tasks with SAP Business One
A key feature of SAP Business One is its ability to streamline processes and workflows. It offers access to a company’s lifetime of data to afford answers to questions that arise during closing periods. Internal reconciliation is sometimes a headache and usually consists of an in-depth series of correspondence. However, individuals completing the task can use SAP Business One’s Internal Reconciliation feature to simply open and analyze AR/AP documents. One may also view the corresponding Journal Entries to quickly discover any discrepancies and post adjusting entries when necessary.
Reporting at the End of the Fiscal Year
SAP Business One Financial and Accounting Modules affords its users’ unparalleled abilities in its Period End Closing Utility. Business One has ability to run reports based on selected criteria and the ability to export as PDF’s.
Leveraging Accounting Automation with SAP Business One: Creating Value
Discover the measurable value delivered in SAP B1 by automating sub period closing, building custom alerts, and facilitating easy reporting. By removing complexities, there is value creation and improved communication. SAP Business One’s comprehensive accounting and financial functionality lives up to its reputation for helping businesses run better. Simplify your Period End Closing processes and focus on your business with SAP Business One Accounting. The vast community of SAP Business One Users and small to mid-size businesses allows for excellent resources and improvement facilitated by your SAP Partner. All of these combined allow for SAP Business One Accounting to simplify the end of the fiscal year. For more information on this topic, you may also look at SAP’s guide to Period End Closing.