It is time to focus on wrapping up the current calendar year while getting busy with the start of the new year. While it is important to start the new year with new goals, it is also important to complete some tasks in the current year. The end of the year is a busy time for all of us, but completing the tasks below will help you avoid costly mistakes and unnecessary data entry, allowing you to base your decision-making on the right data.
1. Check the physical stock
As we close out the year and prepare for the new year, it is a good time to take a close look at the physical stock. This is necessary for an accurate balance sheet. Be sure to perform the inventory check on a day when you are normally closed or even close specifically for this reason. Inform your staff of their responsibilities and the importance of this action to ensure that every item is counted. Accurate inventory figures are needed for financial statements. An ERP software solution reduces the amount of downtime required to do inventory counts. With an automated and real-time solution, the system eliminates the need for manual recounts and duplicate counting procedures. Once the physical inventory inspection is complete, you need to classify your inventory (high-selling items vs. items that are rarely sold), estimate your inventory needs for next year (by reviewing reports from previous years), and remove unwanted inventory (return items to suppliers and remove items).
2. Update your supplier master data
To perform the year-end closing successfully, you will need to update the vendor master data. All supplier data will need to be consolidated and validated. (company names, addresses, phone numbers, contacts, email addresses and settings). Remove duplicate suppliers to avoid duplicate payments. It is wise to delete a supplier if you have not done business with them in the last 15-18 months. Update all creditors with automated solutions. Checking all suppliers can be critical.
3. Run the annual reports
Sound ERP solutions offer business intelligence and reporting capabilities. The built-in reports generate the usual financial reports, such as income statements, balance sheets and tax returns. The system generates accurate reports using real-time data already in the solution.
4. Do financial tax reporting
Integrated ERP software packages enable reconciliation of payments with electronic filing to streamline administration and simplify tax reporting. Electronic timecards, data recording and automatic tracking eliminate manual entry procedures, data errors and redundant data. With integrated payroll and HR functions of an ERP system, quarterly reports can be easily printed before the first payroll of the new year. You can also view and compare financial statements from previous years to evaluate successes and determine measures for improvement.
5. Get accruals and retained earnings in order
A good ERP package has built-in functionality to easily enable analysis of year-end income and net profit/loss versus retained earnings. Performing these tasks at year-end is especially important to ensure that all income and expenses are reported in the correct year to accurately reflect your financial performance. With these quick and easy tasks, you can accurately close your books in record time.
6. Lock the general ledger to avoid posting to the wrong year
One of the most important tasks at the end of the year is making sure that users of the system place entries in the correct year. Some users, such as in the finance department, need the ability to place bookings in the year that has just ended or, conversely, place bookings in the year that has yet to begin. Most other users should be barred from booking in the previous year and allowed to book only in the new year. A strong ERP system should be able to handle these varying booking date requirements without problems.
April Potts is responsible for Marketing & Sales at Dysel North America and combines experience in marketing, at equipment dealers and with ERP software to help dealers drive their business forward.
