This essential year-end enterprise resource planning (ERP) guide offers a set of guidelines to utilize your system to close out the fiscal year productively. Not only will your ERP be updated and ready for the new year, but you’ll also ensure that your team is ready to tackle every financial task once they return from the holiday break.
No matter which ERP platform our company uses, this comprehensive year-end ERP guide will be your go-to resource now and for many years to come.
What Are the Advantages of Using an ERP End-of-Year Checklist?
Your company relies upon its ERP system for accurate, up-to-the-minute financial data. By using an ERP checklist, you’ll help ensure financial accuracy. It will help you check all transactions, general ledger entries, and account balances, providing you with ample time to find and correct errors.
Next, following a checklist at the end of each year helps create a smooth transition into the new year. Reconciliations will be complete. Errors can be corrected instead of carried over. It’s like doing spring cleaning on your ERP system (only in the winter!)
Regular backups and system maintenance activities in the checklist contribute to data integrity. In case of any issues, having a comprehensive backup ensures that critical data can be restored.
Overall, the benefits of using an ERP year-end checklist include enhanced financial accuracy, compliance, efficiency, and risk management, contributing to the business’s overall health.
Your Comprehensive 15-Step ERP Checklist
Before embarking on this checklist, gather any relevant information you still need to enter into the system: bank statements, credit card bills, invoices, and payments. Update the system and set a cutoff date for data entry, communicating this to your finance and accounting teams so that you know when you can embark on year-end close.
- Review Financial Data
After updating the system, your first step is to conduct a thorough and comprehensive review of the existing financial data. Verify that all transactions are recorded accurately. Check these against statements and records and track down any mistakes so you can correct them. Reconcile bank statements, credit cards, and other financial accounts and records.
- Check the General Ledger
Confirm that the general ledger is up-to-date, and all transactions are correctly categorized. Ensure that account balances are accurate. Again, if you notice any balances that are significantly off, explore them within the system to find out what is causing the error.
- Conduct Physical Inventory
If your company sells goods, now is the time for the year-end inventory. Ask the warehouse staff to conduct a final inventory. Be sure they investigate the returns area and check all bins, shelves, and the picking and packing area so that everything is accounted for. Barcode scanners with warehouse modules that integrate into the ERP system make this step easy and fast. However, if you do not have such a system, take time to enter the information into the ERP and double-check it for accuracy. Reconcile the inventory count with the system.
- Set a Year-End Date and Close Accounts
Communicate your year-end cutoff date to the entire company. Then, close out each module to prevent further entries: accounts payable, accounts receivable, and inventory.
- Review and Update Depreciation
Review and update the depreciation schedule for fixed assets. Did you add any new assets in the past year? If so, review these as well and create a depreciation schedule. Ensure that depreciation expenses are accurately recorded.
- Conduct Payroll Reconciliation
Verify payroll records and reconcile them with financial statements. Confirm that all employee information is accurate and updated. Note any unpaid sick leave or vacation time and carry it over or adjust it as per your company policies.
- Calculate Taxes
Calculate any taxes due for the previous year, including payroll taxes. Ensure compliance with tax regulations for the closing year. Verify that all necessary tax forms and reports are generated and filed. You may wish to schedule reminders in your ERP or your calendar system of when taxes are due in the new year so that you do not miss any reporting deadlines.
- Review Vendor and Customer Balances
Review all vendor and customer balances. Are there any with outstanding issues, such as unpaid invoices? Address these issues now and make necessary adjustments or notes in the system. Confirm that all payments and receipts are recorded.
- Conduct a Bad Debt Review
This is a great time to review any outstanding receivables and note potential bad debts. Decide whether you will carry them over into the new year. Make necessary adjustments to the allowance for bad debts.
- Make a Data Backup
Although cloud ERP systems often include automatic backups, it’s also a great idea to make an onsite backup. Create a comprehensive backup. Store it in a secure location.
- Perform System Maintenance
Again, depending on your system, you may need to perform updates and routine maintenance. This may include updates, patches, and security updates.
- Evaluate Budget Performance
Conduct a budget review. First, evaluate the previous year’s budget. Then, adjust the upcoming year based on the previous year’s review.
- Schedule Employee Training
This is also a great time to schedule employee training sessions. Set times for new employee training and time for refresher training on system updates or changes that will be implemented in the new year. You may also wish to share valuable resources, such as our YouTube channel that offers free training videos on Acumatica to help users get the most from their system.
- Generate Year-End Financial Statements
Run your year-end financial statements, including the balance sheet, income statement, and cash flow statement. Review and verify the accuracy of these statements.
- Share the Financials with the Team
Share the year-end financial statements with stakeholders. Set aside time to meet with stakeholders to review the financial statements and progress towards goals. Answer questions about the finances. Schedule time with employees (if applicable) to review the finances, and also set time with external parties to discuss any changes in payment schedules and invoicing in the new year.
- Review and Update Internal Controls
Conduct a security review of the ERP system. Update internal controls, processes, and documentation around handling finances or access to the ERP. Review personnel who have access to the ERP and their access level and adjust if necessary. Remove any employee access for people who have left the company and for vendors or suppliers (if they have access) with whom your company no longer conducts business.
- Document End-of-Year Procedures
Write down all end-of-year procedures and document the processes for future reference. Ensure that documentation is easily accessible to relevant personnel. Schedule time to review procedures with applicable finance team members.
As part of your end-of-year planning, you may also wish to schedule time with everyone who uses the ERP, either in a group meeting or in smaller group sessions, to find out if they need anything else from the system.
Discover whether the team feels they can access the data quickly and easily from the system. If not, what would help them? Additional training? Group sessions or one one-on-one sessions?
Does anyone need a change in permission levels? If someone is in a new position or has received a promotion, you may need to update their access and permission levels.
Find out if there are any needs or wish lists for reports. Sometimes, these can be addressed internally through training or finding a way to run the reports from the existing system. If custom reports need to be built, find out how urgent the need is, and then see if you can budget for it.
Your company’s ERP is a powerful platform that offers visibility into many aspects of your business. A thorough year-end checklist ensures you’ll be ready to tackle the new year with ease.
Mindover – Ready for the New Year!
Mindover’s consultants can help you assess your ERP and create an action plan to update if necessary. Contact us or call 512-990-3994.