This time every year, Microsoft Dynamics GP customers start getting anxious about the upcoming year-end (YE) close process. In fact, Sikich sponsors a user group meeting for our clients where we walk them through the YE close process. It is always one of our best-attended user group meetings as it provides an opportunity for folks new to Dynamics GP to wrap their heads around the process, while giving the pros with Dynamics GP a nice refresher on this process. I would like to help alleviate your fears and empower you with the knowledge needed so closing your YE in Dynamics GP is a breeze.
Whenever I talk to clients about the Dynamics GP Year-End close process, they always ask where they can find more information. The best reference is the following Knowledge Base (KB) article distributed by Microsoft. This KB article discusses how to close the year for the General Ledger module. However, what many users do not know is there is actually a close for many of the sub-ledger modules including Inventory, Receivables Management, Payables Management, Fixed Assets, Analytical Accounting and Payroll. As such, the first step in the KB article referenced above is to close each of the respective sub-ledgers. Therefore, this KB article actually has hyperlinks to each of the respective sub-ledgers. I have included some important highlights for each of the respective sub-ledgers below.
Many of the steps included for IV are actually done throughout the year, including reconciling quantities and completing a physical stock count. However, one of the things that you can do at the YE close that you cannot do during the year is remove Discontinued Items. This is a feature some users like to take advantage of at YE.
Receivables Management (RM)
Textbook-wise, Microsoft wants you to enter all transactions for the prior year before entering any transactions for the new year, close the prior year and then never go back and enter a transaction to that closed year. The reason for this is there are certain Inquiry windows and SmartList columns that are updated when you close RM regardless of the close date. Dynamics GP scoops up all the transactions in the “This Year” bucket and moves it to the “Last Year” bucket regardless of date. However, I find the real world does not operate this way. Users need the ability to enter transactions in the prior year and current year, therefore, I tell users to close as timely as possible, but know the distinction between the two years will be a little blurred. So, if you ever find yourself trying to answer the question, “How much did we do in sales with that customer last year?” create a detailed SmartList that outlines all of the transactions for that customer and filter by Document Date. By doing so, you will know you have the correct number.
Payables Management (PM)
The same rules apply for the PM close as for the RM close, specifically the distinction between the two years is a little blurred. Both RM and PM have a Calendar Year and Fiscal Year-End Close. Some users will say, “My year-end is June 30 and I don’t need to do the Calendar Year-End Close.” However, that is not actually true. When you perform the Fiscal YE Close, all data moves from the “This Year” bucket to the “Last Year” bucket with the exception of 1099 Amounts and Finance Charges for PM and RM, respectively. The data in the 1099 Amount and Finance Charge buckets only moves when you do the Calendar YE Close. It is important to note that starting with Dynamics GP Version 9, you can print your 1099s at any point in time. The printing of 1099s is no longer tied to whether your year is closed.
Fixed Assets (FA)
When closing FA, always make sure that all additions and retirements have been entered for the year you are closing. Also, make sure that all assets have been fully depreciated through the last day of the fiscal year. If they have not, you will receive an error message during the close. Do not ignore this error message! It’s there for a reason and will save you a significant amount of consulting dollars if you resolve the issue now rather than clicking through the error message. Although the reporting features of FA have improved in Dynamics GP Version 2013, it is still a good idea to print the reports referenced in the FA Close KB article since some of those reports cannot be reprinted after you close the year. Also, export all of the columns for all records in the FA Book SmartList to ensure you have all depreciation fields in an excel spreadsheet as of the end of the year, so you can answer any questions the auditors may pose.
Analytical Accounting (AA)
Beginning with Dynamics GP Version 10, SP2, AA started tracking historical values. There is no separate closing process for AA. However, there are some SQL scripts referenced in the AA KB article that are a good idea to run to proactively confirm you will have no issues when you go to close the GL, and to ensure your AA and GL data match so you will also have no issues when you go to print your financial statements in Management Reporter.
It is important to note that the PR module also has its own close. However, its close is always performed at the end of the Calendar Year and is independent of the GL close.
General Ledger (GL)
Finally, the GL close. As you can see from above, you start out and work your way in to the GL. The GL close is the most obvious module. If you do not close your GL, your beginning balances will not roll forward. Therefore, when you go to print your first Trial Balance in the new year, all of your beginning balances will be at zero. Some users seem to struggle with when to close the GL. Do you wait until your entire audit adjustments are in or do you close timely, then go back, and post to the closed fiscal year at a later date?
Personally, I prefer to do this as close to the YE as possible, so I have beginning balances in the new year. You can always easily post to your most recently closed year. Beginning with Dynamics GP Version 2013, R2, users now have the ability to reverse previously closed years to go back even further than your most recently closed year should the need arise.
Before you close the GL, make sure to have all users exit the system. Never do a YE close without a restorable backup! Also, save yourself some consulting dollars and make sure you run the Accounts SmartList to confirm all accounts are properly coded to a Balance Sheet vs. Profit and Loss (P&L). It’s fine if you had the wrong Typical Balance during the year, but it has to be right when you close the year or you will end up with Balance Sheet accounts closed to Retained Earnings and/or P&L accounts with a beginning balance.
How long the YE close takes will depend on how big your database is. During the GL close, the data is moving from the Open tables to the History tables. The more data you have, the longer this process takes, so remember to be patient. Even if GP says it is not responding, I bet it is. Typically, the only thing that hurts the YE close is the user themselves. If you close out prematurely on the YE close, you have no option but to restore from a backup.
Once the YE close is complete and you receive your YE Close report, save a copy of this report, as you will not be able to reprint it at a later date. Also, jot down the Journal Entry (JE) number on the top of this report and look that JE up on the Financial Homepage >> Inquiry >> Journal Entry Inquiry. You should find the Debits equal Credits in this window and your Difference is zero. Sounds simple, but over the course of my nine years of consulting I have run into situations where users determined a month after their close (yikes) that their Difference was not zero. Obviously, given the time that had elapsed, restoring from a backup was not an option. Therefore, we had to spend a good deal of time data fixing. Save your consulting dollars and add this simple check to the end of your process to give you peace of mind.
Still worried about the YE close? Consider doing a screen share with your Dynamics GP partner. Depending on the size of your database and the modules involved, most users can close all modules in one hour. Although you only do this process once a year, so don’t sweat it. Take a deep breath, make a backup and get going.