7 Steps to Close the Financial Year

Business Central, Article, Webinar

7 Steps to Close the Financial Year

Let’s close our fiscal year with these seven steps in Microsoft Dynamics 365 Business Central. Now that your fiscal or calendar year has concluded, it’s time to close the accounting period in Business Central. It’s been at least a year since you last did this, and you might be doing it for the first time in Dynamics 365. Use our checklist and these 7 Steps to Close the Financial Year.

 

7 Steps to Close the Financial Year with Business Central

Download: 7 Steps to Close the Financial Year

Step One – Perform Month-End Processes

First, double-check that all sub-ledger transactions (Bank, Cash, Accounts Receivable, Accounts, Fixed Assets, Inventory) have been posted. Then double-check that any General Ledger (GL) General Journals have been posted. Finally, run a GL Trial Balance for the year to keep a permanent record.

Here is our Month End checklist

  • Post all Activities for the period
    • Sales, purchases, general journals, asset activity, item journals
    • Recurring Journals
    • Calculate Depreciation
    • Intercompany Consolidations
  • Reconcile Bank accounts
  • Reconcile control accounts
    • Cash
    • Accounts Receivable 
    • Accounts payable 
    • Fixed Assets 
    • Inventory 
  • Run and Print Reports
Month end closing checklist

Download: 4 Steps to Close the Month

Step Two – Perform Quarter-end Process

Once you have posted everything, reconciled the banks, reconciled the control accounts, printed any reports that might be needed for a month or period end, you may have other processes required for quarter-end. During this step, you will want to run any of your internal reports and procedures for the quarter-end. For example, you may need to generate tax reporting quarter-end financial reports. Each business and industry will have different needs and requirements. If you need guidance or reports built, our team is ready to help!

Step Three – Verify that the Income balance is set correctly for each General Ledger Accounts

Once you are ready to move on to the year-end close, we need to verify that the chart of accounts numbers are assigned to the proper report, either balance sheet or income statement.

Step Four – Create New Fiscal Year

Best practice: have two fiscal years open at a time, the current year and next year.

 

Having two years open will help with deferrals or projections done in fixed assets. Business Central requires only one year out to be created before it will allow you to close a fiscal year.

 

To create a new year quickly and automatically, go to Accounting Periods > Process > Create Fiscal Year.

Step 5 – Close year from the account periods page

Closing the year is Business Central is a two-step process.

 

First, from the Accounting Periods page, select Process > Close Year

 

Business Central will go to the oldest open year. This Close Year process cannot be reversed, so you will not be able to reopen the year. But it does not prevent you from posting to a close year.

 

It is recommended that you close your year on time. Then if you have an audit or post-closed entries, that’s fine. Any entries made once you close the year will be labeled in Business Central as post-close entries.

Step 6 – Close Income Statement and Post Journal Entry

The second step to closing the year is to close the income statement. This is the formal process of zeroing out your Profit and Loss (P&L) Accounts and moving them to Retained Earnings. Business Central will create a general journal entry from you, but you will still need to post this entry.

 

Chart of Accounts > Process > Close Income Statement

Step 7 Adjust General Ledger Setup

If you restrict access to posting by a date range, you can adjust the date range for the new year from the General Ledger Setup page. You can also set date ranges per user, which can be done from this page as well.

Watch: 7 Steps to Close the Financial Year

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