Finance and Accounting · Daily operations · 10 min read

Close a month and a year

Work through the close checklist, soft close, close and lock a period, move the lock date, reopen with control, and run the year-end close.

Before you begin

• Fiscal periods exist for the year (Finance > Configuration > Accounting periods, enter the year and press Generate twelve months). A company with no periods is governed by the lock date alone.
• Permissions: period.lock to generate periods, change status, sign off checklist steps and run the year-end close; period.adjust to post into a soft-closed period and to request a reopen; period.reopen to reopen and to approve reopen requests.
• Two different people are needed to sign off a step and to execute a year-end close.

Period statuses

Each module (general ledger, sales ledger, purchase ledger, inventory, fixed assets, payroll) can be closed separately. For example, closing the sales ledger refuses sales invoices while a manual journal still posts.

Steps: close a month

1. Open Finance > Configuration > Accounting periods and open the month.
2. Review the Checklist. As an administrator you can shape the steps with Close template (Use the usual order): steps can wait for other steps, and a step can require evidence.
3. Each step owner finishes the work, then adds evidence (a note, a reference or a file under 10 MB) and presses Mark ready. For a manual step, record the Difference found (enter 0 if it agrees).
4. A different person with period.lock presses Sign off. The owner and the person who marked it ready cannot sign it off. If figures moved after the step was marked ready, sign-off is refused; use Send back and mark it ready again.
5. Set the period to Soft closed once the main postings are in. Adjusting entries can still be made by period.adjust holders.
6. Set it to Closed. The system takes a snapshot. If subledgers and control accounts disagree, the close is refused; a period.reopen holder can close over the differences by giving a reason of at least 10 characters, which is stored.
7. Set it to Locked when the books are final.

Move the company lock date

1. On Finance > Accounting > Journal entries, press Close period.
2. Enter Lock through this date and confirm. The heading then reads "Locked through" with the date.

The lock date only moves forward. Postings on or before it are refused for everyone.

Reopen a closed period

1. A user with period.adjust presses Request a reopen on the period.
2. Enter the Reason (a full sentence), the Evidence, the ledgers it Covers, optionally the postings dates it allows, and Works until (from today, up to a limited number of days).
3. A different user with period.reopen presses Approve (or Refuse). Nobody approves their own request.

Where the policy Reopening a closed period needs an approved reopen request is on, this is the only route. Posting is then allowed only inside the approved scope and window, and the period must be closed again afterwards. A Locked period cannot be reopened.

Year-end close

1. Make sure the last period of the year is soft closed and no draft journals are dated in the year.
2. Open Finance > Accounting > Year-end close and press Prepare a close. Enter the Last day of the fiscal year and the Retained earnings account (an equity account). Review income, expense, profit and the checks.
3. A different person with period.lock presses Close the year.

Worked example. Income AED 400,000.00 and expense AED 250,000.00 give a profit of AED 150,000.00. The closing entry debits each income account, credits each expense account and credits Retained Earnings AED 150,000.00. The profit and loss report for the year still shows the year.

What happens next

A closing entry (type CLJ) is posted on the last day of the year. The balance sheet shows retained earnings up by the profit and the new year's profit and loss starts at zero.

Good to know

• If an adjusting entry changes the profit after the close was prepared, execution is refused; cancel and prepare again.
• A period.reopen holder can Reverse a year-end close with a reason, unless a later year is closed.
• The year-end close does not lock the year by itself. Close and lock the periods afterwards.