Chapter 11: Month-end/ Year-end
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Closing the month Month end processing entails creating finance charges for past due customers, printing several analysis reports, printing and filing bookkeeping records (journals), printing subsidiary ledgers and verifying their balances, printing general ledger reports, printing customer statements, and running an update program. The procedure takes from four to twelve hours, mostly because of the number of reports to be printed. Once the first phase of month-end closing is completed (the first phase takes about five minutes), you may log back on. The date will now be the new month and you may proceed with entering sales orders and purchase orders. Also, all Insight programs are available during month-end closing. Planning The first step is planning the month ending date. The month must be closed on the last processing day of the month, whichever day you choose. It may be the 25th, or the 2nd of the next month. But all journals must be closed on this date. You may be accustomed to leaving the Accounts Payable open for several days into the new month, while Accounts Receivable is closed. This is available with the GENESYS system. The month is closed for all functions, but you are allowed to post back one period in Accounts Payable, and up to 12 periods in the General Journal. Remembering that the closing day requires that certain daily bookkeeping functions cease, plan within your department to have data entry operators busy with other tasks. The customer service and order department functions are not disrupted. Also plan your computer resources. The printers are busy on closing day. Some GENESYS users perform part or all of their month-closing tasks during off hours, either after 5:00 PM, or on the weekend. You must weigh the overtime factor to the downtime factor. The reporting tasks can be done using the Job Stream or Spooler programs, which reduces the printer tie-up and the need for an operator attending report programs. The Job Stream lets you prepare up to 90 print tasks in a "job queue". Then, start the Job Stream print program and each job will print consecutively without an operator's attention. You can start the Job Stream at 5:00 PM and return the next morning to find all the reports completed, providing you left enough paper for the printer to finish the job. NOTE: We urge you to print from the Job Stream to the Spooler and not directly to a printer! By doing this, your reports on the spooler will be part of the month-end back-up tape that is saved permanently. The Spooler uses a technique that allows you to print reports to open space on the disk, rather than to the printer. You can only print one report at a time to a printer, but you can print several reports simultaneously when using the Spooler. When all reports have been "spooled", start the Spooler print program and each one will be reproduced on paper. The Spooler is handy even during a normal processing day when you don't want to tie up a printer for any length of time. So, using either the Job Stream, the Spooler, or the combination, the printing tasks can be moved to off hours. Next, determine a policy and procedure that assures that all daily bookkeeping tasks are completed prior to the beginning of the month-end closing. Nothing could be worse than to print several journals, ledgers, and financial reports, and then discover that yesterday's cash receipts was not closed. A closed journal means that the journal has been printed and updated and no new transactions have been entered since the update. The system will not allow the month to be closed while any daily journals remain unclosed. Determine a policy that restricts your operators from starting any new journal postings while the month-end closing is in progress. Make clear, for example, the difference between processing new sales orders (Sales Order Entry and Pickslip Printing) which may continue, and invoicing (Order Shipping Confirmation) which may not. Invoicing posts to a journal! The following programs post to journals: Selector and Program name Journal Now begin following a Month End Closing Checklist to assure that all steps are completed.
Month End Closing Checklist
Selector Location
___ ___ ___ All invoicing (and credit memos) for the month are completed, and the Sales Journal closed.
___ ___ ___ The Daily Order Register is printed and the transaction file deleted.
___ ___ ___ All deposits are posted, and applied to invoices as much as possible. Unapplied credits are applied to invoices as much as possible. The Cash Receipts Journal is closed.
___ ___ ___ All inventory adjustments are posted, the Inventory Adjustment Journal is closed.
___ ___ ___ All purchase order receipts are posted and the P.O. Receipts Journal closed.
___ ___ ___ The Daily Purchase Order Register is printed and the transaction file deleted.
___ ___ ___ The A/P Purchase Journal is closed. Postings for the month need not be completed. You can post to a prior month when vendor invoices arrive after the month-end closing.
___ ___ ___ All A/P Checks are printed, and the Disbursements Journal is closed.
___ ___ ___ Reconcile A/P checks if possible. A/P transactions are removed from the system during the Month End Update for the checks that are reconciled.
___ ___ ___ The General Journal is closed. Postings to the general journal can be made to a prior month, or up to 12 prior months, including the prior fiscal year.
___ ___ ___ The payroll batches have been completed and the separate Payroll Month-End Update has been run.
___ ___ ___ If the Workorder Processing system is implemented, confirm all completed production orders and close the Production Journal. ____ ____ ____ Generate finance charges, if desired. Run the Finance Charge Report, Finance Charge Maintenance to change or delete any charges, and the Finance Charge Journal and Update.
____ ____ ____ Print the Inventory Valuation Report. This report extends the quantity on hand by the unit cost to give the total inventory investment for each warehouse. If you are operating with the perpetual inventory method, the total should be compared to the balance of your inventory control account, and should be within a few dollars.
____ ____ ____ Print the Aged Accounts Receivable Report. This report prints the detail of your customer ledgers. The total on the report should match the balance of you accounts receivable control account. You may want to print additional copies of this report, selecting from the many report options available.
____ ____ ____ Print the A/P Vendor Trial Balance Report. This report lists the detail of your vendor ledgers. The total on the report should match the balance of your accounts payable account (not the control account, which probably includes the accounts payable pending account). Remember that you will undoubtedly post additional vendor invoices in the first few days after closing. When all invoices are expensed to the month, you can again print the A/P Trial Balance as of the end of the month, and match it to the accounts payable account in the general ledger.
____ ____ ____ Print Customer Statements, if desired.
____ ____ ____ Print the Salesman Commission Report. Most firms can use this report to determine and generate Commission checks.
____ ____ ____ Print the Salesman Booking Report, if desired. This report shows booked orders for the month listed by salesman.
____ ____ ____ Print Sales Analysis Reports, as desired.
____ ____ ____ Print the General Ledger Trial Balance. This is a list of all accounts, showing beginning balance, current period activity, and ending balance. This will most likely be printed again several days after closing, after additional vendor invoices have been posted to accounts payable. ____ ____ ____ Print the G/L Detail Trial Balance. It shows each account with activity for the current period, listing the source journal, date, and amount. It provides an auditing trail back to the daily journals on which the account appears.
____ ____ ____ Print the Expense by Department and Departmental Expense Reports, if desired.
____ ____ ____ Print financial statements now, or wait until the additional vendor invoices have been posted to accounts payable.
____ ____ ____ Print Monthly Journals, as desired.
____ ____ ____ Run Month End Update.
____ ____ ____ Run Min/Max subsystem to set inventory minimum and maximum stock levels, if desired.
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Updating
When all the printing, balancing, and filing are completed, you can run the Month End Update. No other terminal may be active when the update is started. All other operators are restricted while the update is in progress. The program scans the master files and moves the current month's activity to a history storage area. Thus, the time required depends on the extent of your master files--customer, inventory, salesmen, and vendors. Usually, the update is completed within a few hours.
If this is also a fiscal year end, the update program will proceed to run a Year End Update. Again, the master files are scanned and Year-To-Date fields are cleared. The Year-End Update will take another few hours.
When the initial phase of the update (rebuilding journal files) is concluded, all operators may return to the system and proceed with the new month. The as of date must now be entered using the new month.
For a few days following closing, the mail will contain vendor invoices for expenses incurred in the (now) prior month. These may be posted to the prior month using the Vendor Invoice Entry program. General Journal adjusting entries can also be posted to the prior month. Then, the A/P Trial Balance, the G/L Trial Balances, and the G/L Financial Statements can be run with final figures.
Finance Charge Report
The first step when creating finance charges for past due customer accounts is printing the Finance Charge Report. The program scans the customer and accounts receivable files and sets up a finance charge work file. Customers with a past due balance are added to the work file. Then, a report showing each such customer prints. Review the report because you may want to change a charge or eliminate a customer from this work file before new finance charge transactions are added to the accounts receivable ledgers. Please note that this report sets up the work file only. The actual updating of accounts receivable takes place during the Finance Charge Journal and Update.
When scanning the customer master file, the program will check a flag within each record called the Finance Charge Y/N flag. Customers with the flag set to "N" will be skipped--they cannot receive a finance charge. You can change the flag for any customer by using the Customer Maintenance program.
Before starting this program, check the "as of" date on the terminal. Past due balances are computed based on the due date of each A/R transaction as compared to the "as of" date on the terminal running the report. Make sure this date is correct.
Select Report Options
SPECIFY finance charge percent
This rate is used to calculate the finance charge--a percentage of the difference of the total past due less unapplied credits.
ONLY: Accts past due XXX days
Transactions will be considered past due when the transaction due date is at least this number of days prior to the "as of" date. An example, if the "as of" date is 08/31/86 and the Accts past due days is 5, then all invoices with a due date of 08/26/86 or before, are considered past due. Hence, a five day grace period is allowed.
SPECIFY minimum past due bal
A customer will receive a finance charge if their past due balance is equal to, or greater than the minimum specified.
SPECIFY minimum finance charge
The finance charge is computed as the past due balance multiplied by the finance charge percent. If this product falls below the minimum charge amount, then the charge amount is set to the minimum. For example, if the minimum finance charge is $0.50, the finance charge percent is 1.5%, and customer ABC500 has a past due balance of $28.55, then the finance charge amount (28.55 X 1.5%= 0.43) for ABC500 is set to $0.50, the minimum.
Review the report options and if all selections are correct, press (RETURN) to start the report.
Prior sort data still in the file! Disregard prior? (Y)or(N)
This message appears if you start the report a second time before running the Finance Charge Journal and Update. While records are added to the Finance Charge work file when this report is run, the Finance Charge Update program clears records from the work file. So, if the report is started and records already exist in the work file, the report has been run without a subsequent update.
You may wish to proceed by running the report again. This is okay. The work file is cleared and finance charges are calculated again. Enter "Y" to disregard the prior data and proceed with the report.
However, if you mistakenly started the report, enter "N" and return to the Selector without disrupting the information currently in the Finance Charge work file.
Finance Charge Maintenance
Change finance charges
Once the Finance Charge Report is printed, review the report and change any charge on the list before printing the Finance Charge Journal and Update. You can specify any customer on the report, then change the charge amount.
Change the amount to zero to remove the customer from the finance charge list for this month.
You cannot add a customer to the list, however.
Before you can run this report, you must have a Finance Charge Income account. The program requires a G/L account with a G/L Xref code of "FINCHG". If you have a divisional chart of accounts, then you must have one F/C Income account for each division. The Xref code for each must be "FINCHGdd", where dd is a division code.
Finance Charges
Enter a CUSTOMER NUMBER, press (RETURN) for next customer, or (END)
Enter the desired customer number. The system will display the customer's name and finance charge amount. If a customer is not in the finance charge work file, you cannot add it to the file. You can press (RETURN) and the next customer in the work file is retrieved and displayed. Or, you can press (END) to end the program, returning to the Selector.
CHANGE (finance charge amount) TO
Enter the new finance charge amount, or press (RETURN) to leave the amount unchanged.
End The Program
Continue to enter customer numbers, or press (RETURN) to bring up customers automatically. When finished, press (END) instead of a customer number. The program ends and returns to the Selector.
Finance Charge Debit Memos
You may print debit memos to customers for the finance charges you are creating. The debit memo prints on your standard invoice form. Hence, load invoices into the printer before starting this program.
The debit memo will show in the body of the invoice the description (month) and amount of the finance charge.
This is an optional program. You do not need to print debit memos in order to run the Finance Charge Journal and Update. Many firms are content to show the finance charge only on the monthly statements.
Note: Although you are printing to invoice forms and this program functions like the daily invoice printing, this program prints only debit memos created by finance charges. No other invoices or credit memos will be printed.
Select Report Options
MODE: (S)ingle or (A)ll
Enter "A" to print all of the finance charge debit memos that have not been printed yet.
Enter "S" to print or reprint for specific customers only. After you enter the Start Printing command, the system asks you to identify the customers to be printed.
Review the report options and if all the selections are correct, press (RETURN) to start the report.
MESSAGE 1
If appropriate, enter a message to be printed at the bottom of each debit memo in the current batch. Your entry can be up to 64 characters.
MESSAGE 2
If appropriate, enter a second message to be printed at the bottom of the debit memos. Your entry can be up to 64 characters.
Do you require forms alignment? (Y)or(N)
If you want to print a test pattern on the first form to make sure that your paper is aligned correctly reply with "Y".
If you print a test pattern, this prompt appears again. You can then print the pattern again if you realigned the paper and want to test the new alignment.
Enter the CUSTOMER NUMBER to print, or (END)
This prompt appears if you have selected the SINGLE mode.
Enter the customer number for the debit memo you want to print. The computer prints the debit memo and then redisplays this prompt.
Enter another customer number, or press (END) if you are done.
Finance Charge Journal & Update
When finance charges are ready to be added to the accounts receivable, print the Finance Charge Journal. Check the list, then proceed with the Update which posts to the general ledger and adds transactions to the customer ledgers. The finance charge work file is cleared.
Select Report Options
There are no report options for this program. Press (RETURN) to start the report.
Review The Report
The first part of the journal lists one line for each customer finance charge.
The second part of the journal summarizes the General Ledger entries to be made by the update.
Update the Journal
After the journal printing has concluded the system displays this message:
Do you want to update the Finance Charge Journal? (Y)or(N)
Check the journal BEFORE you respond to this question. Make sure all printing is legible and that the journal is complete and in balance.
Type "Y" to proceed with the update. Type "N" to return to the Selector without updating.
The update program scans the batch of finance charges and creates an accounts receivable record for each. When completed, the Finance Charge Journal file is cleared for the next month.
DR Accounts Receivable "A/R"
CR Finance Charge Income "FINCHG"
Customer Statements
One of the greatest features of an automated accounting system is the ability to rapidly generate the documents of business. This is especially true at month-end when you want to generate customer statements. If you have been posting cash receipts and adjustments on a timely basis, you are ready to print the statements on closing day, the last day of the month.
Load the statement forms in the printer. The program will help you align the forms, if necessary.
You can limit the number of customers that will receive statements by setting criteria in the Report Options. Also, each customer record has a field called Statement (Y)or(N). If this field is "N", then no statement is printed for the customer.
Make sure the "as of" date is correct for the terminal running the job. Past due balances are computed based on the due date of each A/R transaction as compared to the "as of" date on the terminal.
Be sure that finance charges for the month, if any, have been completed.
Select Report Options
SEQ: (C)ustNo/(S)alesman
You may print the customers in customer number sequence, or in groups by their assigned salesman number.
C customer sequence
S salesman sequence
RANGE: First number to print
The two Range fields set limits for the printing. But the meaning of these fields depends upon the selected sequence.
CUSTOMER SEQ: Enter the first 6-character customer number to be included in the printing, or leave this field blank to start at the beginning of the Customer file. Only customers with an A/R balance not equal to zero will have statements.
SALESMAN SEQ: Enter the first 2-character salesman code to be included in the printing, or leave this field blank to start with the first salesman in the Salesman file.
RANGE: Last number to print
Enter the last customer number - or salesman code - to be included in the printing, or leave this field blank to end with the last customer - or salesman - in the file.
MODE: (S)ummary or (D)etail
Enter "D" for a detail printout which prints one line for each accounts receivable transaction (invoice, credit memo, payment, adjustment) in the file.
Enter "S" for a summary printout which prints only one line per invoice, showing the current balance of the invoice. Any payment or adjustment records are not shown.
ONLY: Accts past due XXX days
You can limit the customers that will receive statements. Enter a number between 1 and 120 to print only those customers with at least one unpaid invoice that is past due at least the number of days requested.
ONLY: Credit balances (Y)or(N)
This special option can limit the printout to only customers that currently have a credit (negative) A/R balance. Unless you desire this special output, keep an "N" next to this option.
SPECIFY minimum A/R balance
You can limit the number of statements printed. To receive a statement, the customer's Accounts Receivable balance must be greater than or equal to this amount.
Review the report options and if all selections are correct, press (RETURN) to start the report.
Do you require forms alignment? (Y)or(N)
Do you want to print a test pattern on the first form to make sure that your statements are aligned correctly? Reply "Y" to print a test pattern. Reply "N" and customer statement printing begins.
If you print a test pattern, this prompt appears again. You can then print the pattern again if necessary, to test the new alignment.
Salesman Commission Report
As invoices and credit memos are generated throughout the month, commissions by salesman are accumulated . At the end of the month, print the Commission Report to list all such transactions grouped by salesman with salesman totals. The report shows the transaction number, date, customer number and name, net sales amount, commissionable amount, commission rate, and calculated commission payable.
The commission file is cleared during the Month End Update, so be sure printing this report is part of your month-end closing procedures on the last day of the month.
Select Report Options
RANGE: First Salesman to print
Enter the two-character salesman code of the first salesman you want to include on the report, or leave the field blank to begin with the first salesman in the commission file.
RANGE: Last Salesman to print
Enter the salesman code of the last salesman you want to include, or leave the field blank to end with the last salesman in the file.
ONLY: Division code
If you are using divisional accounting, you may print only commission transactions for customers in one division by specifying the desired division code. Otherwise, make sure this field is blank.
Review the report options and if all selections are correct, press (RETURN) to start the report.
Salesman Booking Report
This report lists new orders booked in a selected time period, printed in salesman sequence. This shows management and the sales force what business they have generated over the period.
The summary option lists one line for each transaction. This could be an order that has not yet been shipped, or an invoice, or a remaining backorder. It includes the total order amount or shipped amount, and any calculated commissions due.
The detail option includes for each transaction, the actual merchandise lines. The salesman can check to be sure that the correct merchandise was ordered and shipped to the customer.
Both options print transactions in customer number sequence so that the salesman easily can review the status of his customers.
You may print this report at any time. You can specify a starting and ending date in order to show activity for a specific period of time, for one week or one month for example.
Since the sales order file is purged during the Month End Update (shipped orders may be deleted), be sure to print this report as part of your month-end closing procedures on the last day of the month.
Select Report Options
RANGE: First Salesman to print
Enter the two-character salesman code of the first salesman you want to include on the report, or leave the field blank to begin with the first salesman in the file.
RANGE: Last Salesman to print
Enter the salesman code of the last salesman you want to include, or leave the field blank to end with the last salesman in the file.
RANGE: From date (MMDDYY)
Enter a starting date. Orders booked on or after this date will be included on the report. The ORDER DATE field in the sales order record is tested.
RANGE: To date (MMDDYY)
Enter an ending date. Orders booked on or before this date will be included on the report. The ORDER DATE field in the sales order record is tested.
MODE: (S)ummary or (D)etail
Enter "S" to print a summary report. This format prints one line per transaction.
Enter "D" for a detail format. This report will include the actual lines of merchandise booked or shipped.