How To: Month-End Close on Microsoft Great Plains
If the Year-End Close is the process that receives the vast majority of the attention in the world of accounting, the Month-End Close is the star behind the scenes.
Think of the Year-End Close as the lead singer for a famous rock band. But the rock show would not be as great without the background work of the bass player, the songwriter, and the person running the lights.
This background work is similar to what the month-end close represents.
Performing Month-End Closes with Microsoft Dynamics Great Plains (GP) sets you up for a great Year-End Close. We’ll show you the steps required to complete your Month-End Close using GP.
WHAT IS INCLUDED IN A MONTH-END CLOSE?
The Month-End Close process reconciles a company’s accounting data at the end of each month.
Performing these calculations at the end of each month is usually not as important as the Year-End Close. However, the month-end finish allows you to make sure all your data is in order.
By performing regular Month-End Closes, you can catch potential snags early and be prepared for the new fiscal year.
Some companies require accurate month-end closing processes, while others may only want estimates each month. Others skip the month-end closing and only perform a reconciliation at the end of a quarter or year.
For companies that perform Month-End Closes, the process includes the following:
- Tracking all income received during the month
- Recording all expenses during the month
- Reconciling all balance sheet accounts at the end of the month
- Entering any adjusting journal entries
- Preparing financial statements at the end of the month
HOW LONG SHOULD A MONTH-END CLOSE TAKE?
The average company’s Month-End Close ranges from three to ten days. This gives time to review reconciliations and complete variance analysis before presenting numbers to management.
You can take a few steps to reduce the length of time for your Month-End Close, like:
- Use accounting software, such as Microsoft GP, to minimize data entry errors
- Automate processes that you have to repeat each month
- Consider incorporating new technologies that offer Microsoft GP integrations
- Build a closing checklist or flowchart to ensure you don’t miss any steps and to keep the team on task
HOW TO PERFORM A MONTH-END CLOSE IN MICROSOFT GREAT PLAINS
Before we discuss how to perform a Month-End Close in GP, we have to mention that GP does not have a specific month-end closing process as part of the software.
GP has specific steps and processes for the year-end closing, but the Month-End Close allows for more flexibility. The key is ensuring you have a trusted set of steps in place to deliver the data you need. Fortunately, we are ready to help!
Step 1: Make a backup copy
Before attempting your Month-End Close, you must create a backup copy of your databases and data. Many people automate this process by setting up a monthly schedule for making backups. You’ll then have the necessary backup in place without having to think about it.
Step 2: Run the Check Links command
You may want to run the Check Links feature in GP before starting the Month-End Close process. This process analyzes your accounting files, ensuring all files share identical records. If any data or records are missing, GP will fix the issue. Check Links ensures integrity.
Click GP > Maintenance > Check Links
Understand that Check Links only works if no one else is using or logged into GP, so you may want to run Check Links overnight. It also may be beneficial to run it overnight because it can take a few hours to complete its tasks, which would tie up your system if you run it during business hours.
Step 3: Determine the date to cut off transactions
Make sure that all your transactions for the month have been posted. Some companies choose a specific cut-off date for transactions from the previous month. Any transactions or invoices that occur after that date will go into the following month.
Additionally, if your company uses journal vouchers, you will need to make sure all of them are posted before the cut-off date.
You may constantly have to email other employees about submitting information to meet your cut-off dates each month. If so, you may want to automate sending reminder emails.
Step 4: Close the general ledger for the month
You are now ready to start the closing procedures. You will close the tasks for your modules in GP, including the accounts receivable, accounts payable, and inventory.
Once you close these modules, you will not be able to add any items to them for the closed periods, which shows the importance of selecting the cut-off date we discussed earlier.
After closing the modules, you can perform some additional tasks. The following steps may not apply to your particular company and accounting situation.
Step 5: Calculate currency fluctuations
If your company tracks transactions in multiple currencies, you may want to use the foreign currency revaluation form in GP. You then can determine any unrealized gain or loss from currency fluctuations for the period.
Click General Ledger > Periodic > Foreign Currency Revaluation
Then select the accounts to use, the dates to use, and the currencies to use. Select the Adjust Profit and Loss Accounts and Adjust Balance Sheet Accounts checkboxes. Then click the OK button.
Step 6: Use ledger settlements
You may want to settle transactions between your ledger accounts for the period.
Click General Ledger > Periodic > Ledger Settlements
Click on the Include box for all transactions that you want to settle. (You also can click the Exclude box to remove a transaction from consideration.) As you select different transactions, the balance number will change to reflect your selections. Continue selecting transactions until the balance goes to zero. Then click the Accept button.
That’s why rock bands hold rehearsals before their main show.
If the bass player’s guitar is out of tune or the close-of-show pyrotechnics are a dud, discovering these issues in time to fix them helps the actual rock show go off without a hitch. Performing Month-End Closes can give you the best chance of having a hitch-free Year-End Close.