Month-End Close Process in Dynamics 365

Like the film “Groundhog Day,” when Bill Murray’s character experiences the same day over and over and over for what’s been estimated to have been 30+ years, Month-End Close can feel like another version of the classic comedy. 

Every 30-ish days, you repeat the same tasks:

  • Reconcile balance sheet accounts like accounts receivable and payable
  • Review open sales orders and purchase orders
  • Record depreciation
  • Scrutinize the trial balance
  • Prepare the financial statements
  • Plus 1,000 other closing procedures

But when you use Microsoft Dynamics 365 Finance, the Month-End Close process gets a boost with the financial period close workspace that tracks all closing processes by company, department, and person. 

The Microsoft ERP arena

The current iterations of Microsoft’s ERP include Microsoft Dynamics 365 Finance for medium and large-sized businesses and replaces Microsoft Dynamics AX.

And its Business Central software is geared toward small and medium-sized companies and replaces Dynamics NAV. 

For those of you who remember one of the O.G. ERPs (hint: it was Great Plains which morphed into Dynamics GP), Microsoft is sunsetting this workhorse in 2028.

We’ll cover the month-end closing process for Dynamics 365 Finance. But this process can be used for any period end, including your fiscal year-end closing.

Getting ready to close the books

Before you can start to officially close the month in Dynamics 365 Finance, it’s best that bank reconciliations (really, all reconciliations should be finished) before starting on the close. 

You can use Microsoft’s built-in automation or you can stick with your manual Excel reconciliations. Either way, get them done beforehand to close faster.

You might also want to give the general ledger a glance for anything way out of the ordinary.

Steps to close month-end in Dynamics 365 Finance

After you’ve reconciled your balance sheet accounts and posted all of your adjusting entries, you’re ready to close your Dynamics 365 Finance books.

Here’s how to do it – step-by-step.

Step 1: Navigate to the financial period close configuration

Click: General ledger > Period close > Financial period close configuration 

Once you’re there, we’ll start at the bottom and work our way up.

Step 2: Create closing Rolls

Your company’s closing Rolls will depend on your organization’s structure.

Think about all the people and roles involved in the closing process. This can include Roles like:

  • Accounting manager
  • Payables clerk
  • Receivables clerk
  • Collections accountant
  • Inventory manager
  • Purchasing manager

Step 3: Assign closing Roles to team members (known as Resources in Dynamics 365)

Above “Closing rolls” on the left-hand menu is “Resources.” This is where you’ll assign individual staff members to one of the closing rolls you created in the previous step.

In the unlikely event that a name is missing from your Resources list, you can add them to human resources:

Click: Human Resources > Workers > Employees

Now you can assign each employee a closing Role. And if you have multiple companies, you can set the closing Roles per company.

But Roles can only be assigned to one person per company. If you have two staff accountants, you would have to number the Rolls when you recreate them – e.g., Staff accountant #1 and Staff accountant #2.

Step 4: Define Tasks

Now that we know everyone’s Role, we must create closing Tasks.

Think about what different closing tasks are involved in your company. If one of the tasks is to review the fixed assets schedule, you’d want to create a task area for Fixed Assets. 

Look at your trial balance or balance sheet to ensure you include all closing areas.

Step 5: Select Calendar dates

The next step is to create a Calendar so you can provide deadlines for Tasks. For example, if you use a five-day close, you will create a Monday – Friday Calendar.

You can specify holidays and weekends so Dynamics will know to not set deadlines on those days.

Step 6: Create Templates

One of the last things you need to do is create Templates that tie together all the configuration settings you’ve established. 

Templates let you add all your Month-End Close tasks, due dates, Roles, links to required reports, and other details you need to close on time.

Here you can create dependencies. What’s that you ask? If a task must be completed prior to starting a different task, this is known as a dependency. It means the dependent task can’t be started until the predecessor task is marked complete. 

Each period-end close will need a closing Template. But once you create a month-end template, you can use it repeatedly.

Step 7:  Generate a closing schedule

A Schedule is where you’ll define the period you’re closing and assign a Template and Calendar that you previously created.

After you’ve created the closing Schedule, you can see the status of the closing process by heading over to the workspace.

Click: General Ledger > Period Close > Financial period close

Step 8: Explore the financial period close workspace

Head over to the period close workspace to see the summary of Tasks that are due, completed, and past due. You can view Tasks by:

  • Company
  • Person
  • Area/department
  • List

This dashboard lets you see the progress of your Close. And when all tasks are completed, you’ll have confidence to run your financial statements. 

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Shivang Patel

Shivang Patel is the Senior Director, Growth Markets at FloQast. Prior to joining the team in 2015, Shivang was an accounting manager and early FloQast user before making the leap and starting as an account executive at FloQast. Since then, Shivang has launched and scaled FloQast's Sales Engineering team before taking on his current role in early 2022.