The Period End Processing article below lists the tasks that should be completed at the end of each fiscal period.
We have also included instructions for additional Year End tasks to assist you in closing, or locking, the current fiscal year and opening the New Year.
Closing a Fiscal Period
Closing a period prevents any further accounting transactions from being made within the specified time frame.
You can close a fiscal period from the 5 Periods/Year tab of the General Ledger Setup screen.
To close a fiscal period, select Update Period Status. Use the drop- down list to click Close.
In addition to closing a fiscal period, you can update the period’s status to re-open or lock a period.
Your status options are:
- Inactive - the period is prior to the activation date.
- Open - the period is open for posting.
- Locked - the period is locked to prevent posting from other modules. You can still make journal entries to the period.
- Closed - the period is closed to prevent posting.
Note: During the beginning of the NEW year, you will probably need to post transactions to December or November of the PREVIOUS year. To prevent issues, we strongly recommend marking the last two periods of a new year as Inactive. This way no transactions for the PREVIOUS year get posted as a NEW year transaction by mistake.
Period End Checklist
At the end of each fiscal period, you will want to check certain balances to ensure the integrity of your financial reports. Prior to checking these balances and printing financials, the following steps should be completed:
- Jobs/Invoices - Make sure that all jobs that should be closed in the fiscal period have been closed and that any related AR invoices have been posted. This includes invoices that are entered to record paid work orders and invoices that are entered as Receivables and have a balance due.
- Agreements – Check for missed billings, make sure that all billings for the fiscal period have been processed and posted, and create renewals.
- Warranties – Make sure to update reserve balances to zero for all expired warranties with a reserve balance.
- Accounts Receivable - Make sure that all payments and/or adjustments for the month have been entered, age accounts, and check for out of balance items.
- Accounts Payable - Make sure that all vendor invoices, payments, and adjustments for the fiscal period have been posted, age accounts, and check for out of balance items.
- If you are using the Payroll module of Successware - Make sure that all payroll periods in the fiscal year have been completed and reconciled.
If you are posting Payroll as Journal Entries - Make sure that journal entries have been made for all payroll periods in the fiscal period and that all paychecks have been recorded in the account register. -
The Account Register-
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- Undeposited receipts cash box - Make sure that any cash receipts that were deposited during the fiscal period have been reconciled for deposit and cleared from the cash box.
- Petty Cash - Make sure that all payments that were made from petty cash have been entered, all deposits to petty cash have been recorded and the account has been reconciled.
- Bank Accounts - Make sure that you have reconciled all bank accounts according to the statement and that you have found any outstanding items.
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Credit Card Accounts – Make sure that you have reconciled all credit cards and lines of credit to their statements.
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- Inventory - Make sure that all receipts, adjustments, returns and requisitions have been posted, verify item quantities, and resolve any serialized tag issues.
- General Ledger - Make sure that any journal entries for items such as depreciation have been posted. Once all data entry is complete and all transactions that affect the fiscal period have been posted, generate a Balance Sheet for the fiscal period. When the system prompts you to compile unposted transactions, be sure to answer Yes or the report will not be accurate.
These instructions were created with the assumption that your starting balances (and comparative detail) were entered in balance and that the prior fiscal period(s) balanced, and that all entries have been posted for the current period.
Reconciling Accounts Receivable and Accounts Payable
Both the Receivables Manager and the Payables Manager include a Reconcile utility. The Reconcile utility will compare general ledger balances and report any discrepancies that it finds.
Reconciling the Payables Manager and Receivables Manager
- Open the Payables Manager or the Receivables Manager.
- Select the Accounts subtab.
- Click the ellipsis "..." in the top left corner of the page and select Reconcile.
- The system will display a window comparing the GL balance to the detail balance and will indicate if there is a discrepancy.
- Refer to the When Balances Do No Match section of this article for instructions if the balances do not match.
Account Register
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Bank Accounts - Compare the reconciled balance to the Balance Sheet’s balance for each account.
To reconcile a bank account:
- In the Account Register, select the bank account, and choose Account Reconciliation from the "Select an Activity" drop down.
- Enter the statement date and ending statement balance in the appropriate fields in the top left section of the Account Register.
- Enter adjustments for any service charges or other items that appear on the statement.
- Mark the items that appear on the statement as cleared.
- When the difference is $.00, click Finish. The system will ask if you wish to print the reconciliation report.
- Print the Check Register report for uncleared transactions to reconcile to the General Ledger account. The Check Register report can be found at:
Main Menu -> Report Gallery -> Financial Reports -> Check Register report
- In the Account Register, select the bank account, and choose Account Reconciliation from the "Select an Activity" drop down.
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Cash Boxes - Generate a Check Register report for each account. Under "Items Cleared", select False to see transactions that have not cleared. The uncleared items should match the account balance on the Balance Sheet.
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Credit Card Accounts – Compare the reconciled balance to your bank’s statement.
To Reconcile a Credit Card account:
- In the Account Register screen, select the Credit Card account, and select Account Reconciliation under the Select an Activity drop-down.
- Enter the statement date and ending statement balance in the appropriate fields in the top left section of the Account Register.
- The Statement Ending Balance for a Credit Card Account MUST be entered as a negative value.
- Enter the Statement Due Date and the Minimum Amount Due in the appropriate fields. These fields will be used when paying the credit card account through Accounts Payables.
- Enter adjustments for any service charges, interest or other items that appear on the statement.
- Mark the items that appear on the statement as cleared.
- Click Finish when you are done.
- In the Account Register screen, select the Credit Card account, and select Account Reconciliation under the Select an Activity drop-down.
When the Balances Do Not Match
- In the Report Gallery, select Financial Reports, and click on GL Transactions.
- For the Posting Date range, enter the 1st date of the fiscal period in Start Date and the last date of the fiscal period in End Date.
- Use the drop-down menu to select the Account number for the cash account that doesn't balance.
- In the Origin drop-down, select:
Journal Entry
Reserve Agreement
Inventory Control
Warranty Reserve - Service
Warranty Reserve - Installations
Deferred Revenue (agreement)
- Click Apply Filters to run the report.
This report should include any transactions that posted to that account from an origin that should not affect your cash accounts. The most likely reason is a Journal Entry. After identifying the origin of the incorrect entry, you will correct the entry from the source in order to put the account in balance.
For instance, if a journal entry was made to the account, determine why the entry was made, and then reverse it with journal entries. Then enter the transaction correctly, possibly through Miscellaneous Cash Receipts, Miscellaneous Payments, etc.
If running the report using these options does not find any transactions, it is likely that transactions were posted in error from a valid source, like Receivables, Payables, or the Account Register. The most common error is adjustments, such as credit or debit memos, or adjustments in the account register, that were entered using an adjustment code that affects cash.
Journal Entry Corrections
To create countering entries to those that are out of balance:
- Go to Main Menu -> Accounting -> Journal Entries
- Click the "+ New" button to create a new entry.
- Complete the Post Date, Account and Description fields, then enter the Debit amount.
- Click Save.
Agreements and Billings
When you finalize the agreements for the year, it is important to make sure that expired agreements are terminated, and all the billings have been accounted for. Leaving open old agreements and unmade billings can throw the deferred revenue or reserve expense out of balance as well as make the billing schedule off.
Missed Billings
It is important to make sure that all your periodic billings have been accounted for. There may be times that billings are accidentally missed. Missed billings reflect revenue not recorded and will cause future billings to not be created.
- Open the Agreement Manager and select the Billings Due view.
- Enter the date range by leaving the Start Date blank and the End Date as the last day of the period.
- You will need to figure out on a case-by-case basis what to do for each agreement based on your company’s policy. You may choose to:
- Terminate the agreement if it is too far expired. Select the ellipsis, "..." and click on Terminate/Cancel.
- Create the invoice for the billing to charge the customer if the billing is not that old. It is recommended to do this in bulk by handling all other agreements that need to be terminated.
- When only the periodic billings are left to be created, click the ellipsis in the top right corner and select Create periodic invoices.
Deferred and Reserve Revenue
If you are using Deferred Revenue for Maintenance Agreements and/or Agreement Reserve for Service Agreements, and/or Warranty Reserve for In-house Warranties, you will want to compare those totals.
Comparing the Detail and General Ledger Balances
Deferred Revenue
- Go to Main Menu -> Report Gallery -> Agreements -> Agreement Deferral Analysis
- For the Date Range, add in an End Date that matches the end of the fiscal period, and use a Start Date that goes back one year.
- Click Apply Filters and run the report.
- The Deferred Balance should match the Balance Sheet balance for the account.
Agreement Reserve
- Go to Main Menu -> Report Gallery -> Agreements -> Agreement Reserve Analysis
- For the Date Range, add in an End Date that matches the end of the fiscal period, and use a Start Date that goes back one year.
- Click Apply Filters and run the report.
- The Reserve Balance should match the Balance Sheet balance for the account.
Warranty Reserve
- Go to Main Menu -> Report Gallery -> Equipment -> Equipment Warranty List
- For the Date Range, add in an End Date that matches the end of the fiscal period, and use a Start Date that goes back one year.
- Click Apply Filters and run the report.
- The Reserve Balance should match the Balance Sheet balance for the account.
When the Balances Do Not Match
- Go to Main Menu -> Report Gallery -> Financial Reports -> GL Transactions
- For the Date Range, add in an End Date that matches the end of the fiscal period, and use a Start Date that goes back one year.
- Use the drop-down menu to select the account that doesn't balance.
- In the Origin drop-down, select the following:
- Reserve Agreement.
- Deferred Revenue – Agreements.
- Warranty Reserve – Installation.
- Warranty Reserve – Service.
- Click Apply Filters and run the report.
This report should include any transactions that posted to that account from an origin that should not affect the account. After identifying the origin of the incorrect entry, you will correct the entry from the source in order to put the account in balance.
For instance, if a journal entry was made to the account, determine why the entry was made, reverse it with journal entries, then enter the transaction correctly. (i.e., Reverse invoice and post it correctly, terminate and re-enter agreement, etc.)
If running the report using these options does not find any transactions, it is likely that transactions were posted in error from a valid source, such as the receivables or agreement manager. The most common error is adjustments from credit or debit memos that were entered using an adjustment code that affects that account.
Note: Check with your Accountant for advice on any other accounts and detail that you should be comparing such as negative Assets, loan balances, and clearing accounts.
Inventory
If your company has the Inventory Count enabled, you will need to make sure that you verify your item quantities are correct by performing a Physical Count and making sure that any items that are marked as < Zero have their Average Cost reviewed.
If you have the general ledger activated for Inventory transactions meaning that Valued Items are tracked, you will want to compare those detail balances to the general ledger balances. If you are only tracking inventory counts and not values, this is not required.
Physical Count
If you are using Inventory, you will need to do a physical count to make sure that all of your items have the correct quantity.
- From the Main Menu, select Purchasing, and click on the Inventory Manager. Click on the Adjust button at the bottom of the screen.
- In the Add Adjustment page, enter the Warehouse, Adjustment Code, and Date at the top of the form. For the Adjustment Code, use Physical Count (PHYCNT).
- Click Save in the bottom right corner.
- Click on the ellipsis at the bottom of the page and select Physical Count.
- Select the method of Physical Count:
- All Items in Warehouse Stock List.
- Items By Category and/or Group.
- Items By Bin.
- This will display a list of your inventory.
- Click Edit to edit the item quantities.
- Adjust the Bin, Department, and Physical Quantities (PhyQty). The current physical quantity is how many you currently have on hand and NOT the difference between what the system has and what you count. The system will calculate the difference for you.
- Click Save in the bottom right corner.
- Once all items have been updated as needed, click Save.
- Click Post to post the count and update your Inventory.
How to Find and Correct < Zero Items
Items that are marked as < Zero have their Average Cost frozen to prevent issues. These items will need to be addressed to confirm they are using the correct Average Cost.
- Open the Inventory Manager and select the Parts view.
- Apply the < Zero filter to only see the items that need to be checked.
- Click on the ellipsis, "..." next to a line item, and select Item Value Correction.
- Make sure that the "Total Qty On-Hand" is greater than or equal to zero. If the item has a quantity of less than zero, you will need to do an Inventory Adjustment and come back.
- You will need to determine if the Average Cost is correct. Select the Value subtab to see the available options.
- If the Average Cost is correct, select the Value is correct option.
- If the Average Cost is not correct, select the Adjust value option.
- Enter the Average Cost the system should use.
- Enter the Date the value correction will be posted to affect the general ledger.
- Select the Adjustment Code. This will determine what account will affect the general ledger when the value correction is posted.
- Select the Department.
- Click Save Value Correction.
Fiscal Year End
Once you have run all reports and are sure that everything is correct you will Lock or Close the fiscal period so that no changes can be made.
Locking a fiscal period will allow you to make journal entries but will prevent posting to the general ledger from the other modules.
After completing any/all adjustments required by your accountant you should update the period’s status to Closed. Closing the period will prevent all posting to the general ledger.
When Period 12 is Closed, the system will calculate your Income Statement accounts and post the results to your Retained Earnings account. All Income Statement account balances will be zeroed out to start the new year.
To Lock a Fiscal Period:
- From the Main Menu, select Setup, and click on General Ledger Setup.
- Select tab "5 Periods/Year".
- Highlight the fiscal year in the left panel of the screen.
- Click on the last fiscal period and select Update Period Status.
- Use the drop-down menu to select the status of Locked, then select Save.
After completing all adjustments required by your accountant you should update the period’s status to Closed. Closing the period will prevent all posting to the general ledger.
Adding a Fiscal Year
You must add and activate each fiscal period and year for processing in Successware. To add a fiscal year in General Ledger Setup:
- From the Main Menu, select Setup, and click on General Ledger Setup.
- Select the tab "5 Periods/Year".
- Select the New Year button located in the bottom left corner of the screen.
- Enter the Number of Periods, the Year Description, and whether this is a past year, or a future year, and select Save.
The system will add the fiscal periods for the New Year based on your existing period dates.
Opening Fiscal Years
You will need to open the periods so that you will be able to post to them. To do so:
- Click the Update Period Status button for the first period in the New Year.
- In the drop-down menu, select the status of Open, then select Save.
Note: We strongly recommend making some or all of the new periods inactive to prevent posting to those periods in error. For instance, you may still have December transactions from the PREVIOUS year to enter in January. To prevent posting to December of the NEW year by mistake, December of the NEW year should be made inactive.
Making Fiscal Periods Inactive
- Find the period you wish to make inactive and select Update Period Status.
- Use the drop-down menu to select the status of Inactive, then select Save. All periods after that one will also be made inactive.
You are now ready to start posting transactions in the New Year.
Looking for a more interactive course on Closing a Fiscal Period and Fiscal Year? Check out our Learning Management System (LMS)! Our courses are available to all Successware users. If you don't have a sign-in for our LMS, contact us at training@successware.com for a free account.