At the end of every fiscal year, accountants around the world have an important task to check off their list: the year-end close. Many organizations today are using Microsoft Dynamics 365 Business Central, which has a simple, straightforward year-end closing process that will start your new (fiscal) year off right.
In this article, we’ll show you the process step-by-step, and give a few tips on how to get the best results.
Getting Started
One important step before you embark on the year-end close is to reconcile your Sub-Ledger accounts: Accounts Receivable, Accounts Payable, bank balances, and inventory balances. If you need a tool that can easily run these balance checks, check out our . Once you’re sure those numbers balance correctly, you can proceed with closing.
In the top-right of the Business Central app bar, click the magnifying glass (Search) and type “Accounting Periods”. Then select the first item in the list (in the Administration category):
On the resulting screen, you’ll notice a list of accounting periods (months and years) that have already been closed, along with the current fiscal year still open. Now click Process > Close Year. You’ll see a change, as the periods now reflect being closed with their dates locked. Being grayed out signifies that this process can’t be undone.
Nonetheless, ‘never say never’. You can edit or post transactions in those (now historical) periods, but to keep the books clean, you’ll need to close the year again. This makes sure that all the accounts roll into retained earnings correctly.
While you’re at it, you can also create a new fiscal year from this screen. Just click Process > Create Year, and click OK. Ensure the starting month of the fiscal year (for example, January) is checked.
Close Income Statement
On to the next phase of the year-end close: Close Income Statement. Search for that term using the Business Central app bar. You’ll see a screen similar to the following:
For the best results from this part of the process, here are a few suggestions:
- In the General Journal Batch line, create a separate batch just for the closing. For example, “YE 2022” for the 2022 fiscal year. This step provides a quick and easy way to identify the journal entries for the closing.
- Set the Document Number to something easily identifiable, such as YE 2022.
- Be sure the Retained Earnings account shown is the correct one.
- To keep things neat and concise, we recommend posting to Retained Earnings as Balance, especially if you have a lot of transactions. Selecting Detail will work well also, but it might make reading the General Ledger history overwhelming.
- If you are using Business Units, be sure to enable Business Unit Code.
- Ensure ALL your Dimensions are selected so that they will all be closed properly.
Adjust all the settings for your needs and preferences, then click OK to create the journal entries. Now, just one final step to complete the process.
Final Posting
Back to the Search box – this time for General Journal. In the next screen, you’ll see Batch Name at the top; select the batch you created in the previous step. You’ll now see all of the closing journal entries listed together. It’s a compact, easy-to-digest group, with perhaps a few extra lines for the closing of each Dimension.
Review the entries to be sure they look correct, and finalize the process by clicking Post/Print, and then Post.
Still want to double-check your work? Search for General Ledger Entries, sort by Entry Number, and you’ll find those transactions at the end of the list. The dates will be as you set them before, along with a C prefix that marks them as closing entries.
Wrap Up
Closing out the books at year’s end is one of many important tasks to perform in Business Central. If you’d like to see the process in action, you can also .
If you would like to learn more about Business Central and explore ways to make daily activities in BC more efficient, check out our tips and tricks in . Even better, today – we’d love to hear from you!
By at
