Month End Closing in Business Central

Upon hearing the words Microsoft Dynamics 365 Business Central month end close process most people take a deep breath, become instantly more sad than they were 1 second ago, and conjure up a nightmare of numbers, reports, and equations comparable to the ones Albert Einstein used to create his theory of relativity. Fortunately, month end closing in Business Central doesn't have to be difficult or stressful. Here are a few tips to make your month end closing process simpler.

Before we begin let's talk about a few things.

Assumptions for this scenario

Let’s assume your business is using Business Central online and using General Ledger, Sales and Receivables, Purchases and Payables, Inventory, Manufacturing, and Jobs.

Let’s assume that the current month is July and that we need to complete month-end for July.

Let’s assume that all July transactions have been entered by 8/5/22

Setups we will use to close the period and control (prevent) access to July

The General Ledger setup serves as the default range to which the user is allowed to post entries if either no User Setup record exists or the User Setup record does not have a value in the “Allow Posting From” and “Allow Posting To” fields.

For User Setups we suggest having a record for each user. This is particularly important if using Deferral Codes and some users require access to future periods while others do not. For smaller organizations, this should be easy to handle. For larger organizations, some automation and/or custom fields to complete these steps more efficiently may be useful.

If a record does not exist in this table, then the General Ledger Setup controls the date range for which the user is allowed to post entries.

For Inventory Periods that have (Inventory type) “Items”, these are mandatory to close and limit/control changes to prior periods.

Business Central Month-end Processing Steps

1.) In July (during the June closing) you need to verify that the “Allow Posting To” on user Setup records is set to 8/5/22.

This ensures that users are able to arrive on 8/1/22 and subsequent days and be able to process transactions without issue.

If you have a User Setup record created for a user and you have a “Allow Posting From” date populated, then you must also set a “Allow Posting To” date, otherwise the user will be able to post an entry to any future date regardless of what it is in the General Ledger Setup “Allow Posting To” date field (i.e. 7/1/2022).

2.) On 8/5/22 change “Allow Posting To” date on all User Setup records to 9/6/22.

This ensures that next month users will be able to post entries into that month.

3.) Change the “Allow Posting From” date on all User Setup records to 8/1/22.

This ensures that no users are able to post any transactions to the current month.

4.) Close the Inventory Period (ending “7/31/22”).

Inventory Periods can be created in advance of or during each month-end.

If multiple periods need to be closed, you can close the most recent period to be closed and all prior periods will also be closed automatically.

Inventory Periods can be re-opened at any time for any reason so no stress here.

In order to close a period, the system will verify that no negative inventory situations exist (negative unapplied Item Ledger Entry) and also that all costs on Items are “fully Adjusted”. A Test Report can be run to show why a period cannot be closed. Correct entries and/or run “Adjust Cost – Item Entries” until period can be closed.

5.) Change “Allow Posting From” date on all General Ledger Setup records to first day of following month.

This will ensure that no users are able to post any transactions to July in the case of a missing User Setup record. It is also used by the “Adjust Cost – Item Entries” process to determine the date on which ‘adjusting’ entries related to closed Inventory Periods should be posted.

For example, if you revalue a cost layer that was received in May after you have already closed May, June, and July Inventory Periods, it would post the revaluation entries effective 8/1/22 after this update has been made.

6.) Reconcile all Inventory balances to the G/L and run reports and/or processes.

For Inventory: Run the “Inventory Valuation” report and/or “Reconcile Inventory to G/L” report (per Location depending on Chart of Accounts setup)

For Manufacturing: run the Production Order WIP report (formerly Inventory Valuation – WIP” report)

For Jobs: run the Job WIP to G/L report

7.) If any adjustments to inventory are required, the Inventory Period can be reopened, and a specific User Setup record can be updated “Allow Posting From” to 7/1/22. Re-close and adjust after all entries are completed.

8.) If there are any remaining non-inventory related adjusting entries that still need be done after 8/5/22, you can set the “Allow Posting From” on selected User Setup records to 7/1/22 (or 7/31/22) to allow these users to enter/post journal entries.

Business Central Month End Closing Tip

Setup recurring user tasks

Depending upon your user permission setup in Business Central you can easily create recurring user tasks for other individuals, groups, or yourself. This is a simple way you remind yourself every month to run a report or do whatever it is that you need to do for your month-end process.

Let’s start by selecting the Pending User Tasks tile on the home page.

We’ll enter our General and Status information. I’ve chosen to assign this recurring task to myself.

Let’s enter our Task Item information. For this scenario I’ve selected Report for the “Link Task To” field and chosen 10040 Aged Accounts Receivable for the “Report” field.

Finally, I’ll select Recurrence at the top of the User Task card and enter my Recurring Start Date, Recurrent, and Occurrences.

When I return to the Business Central home page I now see 12 Pending User Tasks. Each month I know to check my user tasks, select which ones I want to work on, run the reports and update.

Hopefully this information and tips will be useful in making your Business Central month end closing process simpler. If you still have some questions don't hesitate to reach out to us by submitting your information below.