Year-End Financial Closing

The Step-by-Step Guide

This plan covers year-end closing for the Financial module in Exact Globe. Follow the steps below to complete the entire year-end closing process:

Create a new fiscal year.
Set the default fiscal year.
Process the result.
Closing periods.
Change document numbers.
Change our reference.

Step 1: Create a new fiscal year

Go to the menu path [System > General > Settings > General Settings].
Here, click the icon next to ‘Period-Date Table’ to open the period-date table.
Click the ‘New’ button.
The next screen automatically displays the upcoming fiscal year. You can create a new fiscal year by clicking the ‘Generate’ button.

When setting up the new fiscal year, you have the option to generate an entire series of new fiscal years at once. If you choose this option, fiscal years for the following years will be created along with the new fiscal year. That way, you won’t have to repeat this step next year.

It may also be the case that the fiscal year has already been created but has yet to be opened. You can do this by following these steps:

Go to the menu path [System > General > Settings > General Settings].
Here, click the icon next to ‘Period-Date Table’ to open the period-date table.
Select the fiscal year for which you want to open the journals/periods.
Click the ‘Reopen Periods’ button. All journals/periods for the relevant fiscal year are now open.

Step 2: Set the default fiscal year

As soon as you begin posting entries for the new fiscal year, it is recommended that you adjust the default fiscal year. To do this, open the Period Date Table maintenance screen.

Go to [System > General > Settings > General Settings].
Click the icon next to ‘Period-Date Table’ to open the period-date table.
Next, click the ‘Settings’ button here. If you want to change the fiscal year, enter the new year and click “Save.” The system will now default to this fiscal year when you request reports.

Step 3: Process the Results

This step in the year-end closing process involves processing the results. The opening balance sheet for the new year always shows a zero balance for all income statement accounts. For balance sheet accounts, the closing balance from the previous fiscal year is carried forward to the opening balance sheet of the new year. This means that the balances of all balance sheet accounts are not zero. Therefore, the balance sheet and income statement accounts are not in balance. This is resolved by posting the net income from the previous fiscal year. You can process the results as often as you like. Each time, the results of all processed entries that were not included in a previous calculation of the results are processed.

The transaction created when the result is posted does not appear on the Income Statement for the fiscal year in which the result was posted. Comprehensive income is still shown on the Income Statement. After the entries have been processed, you will see a net income of zero on next year’s opening balance sheet. Please note that only processed entries are included when calculating the net income. If, after the net income has been calculated, any entries are still processed on income statement accounts in the previous fiscal year, the net income will need to be recalculated.

Go to [Financial > Input > Process] and select the entries you want to process.
Click the ‘Process’ button.
Next, go to [System > Financial > Process Results].
The method is set to ‘Annual’ by default. If you would like to process the results by period instead, you can configure this under [System > General > Settings > General Settings] in the ‘Period and Fiscal Year Check’ section.
Enter the fiscal year for which you want to post the results.
The date range will be filled in automatically for you.
Enter the journal where you want to post the result.
The ‘Account: Balance Sheet’ field is pre-filled by default, but you can change it to a different balance sheet account.
Enter a ‘Description’; the default is ‘Annual Results.’.
Group your results by ‘Fiscal Year,’ and if you use cost centers, you can select the ‘Fiscal Year/Cost Center’ option.
Click the ‘Show’ button.
You will see a summary of the balance for each general ledger account.
If it is correct, you can process the result by clicking the ‘Process’ button.
You will then see the message: ‘Do you want to close all journals for the selected period(s)/year?’
If you select ‘Yes’ in that prompt, the journals for the selected periods or year will be closed automatically. This means you no longer need to do this manually.
If you select ‘No,’ the journals will remain open. You can still close them later using the period-date table.
Once the result has been processed, you will see the message ‘Processed: Financial Entry.’.
Select ‘OK.’.

Note: If, after performing the above action, any transactions are still made that affect the result, you can always run this function again. Once you have completed the steps above, the result has been processed. You can now view the result in the balance sheet. Please make sure that when you retrieve the balance sheet, the checkbox next to ‘Closing Entries’ is selected so that the transaction created by processing the result is included.

Step 4: Close Periods

To minimize the risk of errors, you can close the journals for all periods in the previous fiscal year.

Navigate to the [System > General > Settings > General Settings] menu.
Click the icon next to ‘Period-Date Table’ here to open the period-date table.
When you select the fiscal year here and click the ‘Close Periods’ button, the entire fiscal year will be closed.

You can also close a specific period by opening the fiscal year and then clicking on the number of journals in the ‘Closed’ column for that period. Periods cannot be closed until the entries have been processed, the time entries have been approved, and/or the payments/receipts have been allocated. In this case, you must first process all entries, approve the time entries, and allocate the payments/receipts.

Please note: When closing the fiscal year, you may receive the following message: “The period cannot be closed because there are unallocated payments and/or receipts.” In this case, you have the option to assign the unallocated payments/receipts to the unknown debtor/creditor.

Step 5: Change Document Numbers

It is important to change the document numbers so that they refer to the new fiscal year and so it is clear in which year the document numbers were used.

Go to [System > Financial > Journals] to update the journal entry numbers for the new fiscal year.
Open the journal and go to the ‘Number’ tab. Here you will see that unique numbers have been automatically generated for each fiscal year, with the fiscal year included in the number.
You can change this by clicking on the year and selecting ‘Change.’.
It is important to keep these numbers unique. For each year, you must use unique document numbers with leading digits, such as 20000001 for 2020 and 21000001 for 2021.

Step 6: Change our reference

‘Our Reference’ refers to a specific financial transaction. This transaction may span multiple fiscal years. For example, an invoice from 2020 that is not paid until 2021 will have the same ‘Our Reference’ because it is a single financial transaction. Just as with journal entry numbers, it is important that these numbers are always unique for each financial transaction, regardless of the fiscal year. To distinguish between different financial transactions, you cannot reuse the same ‘Our Reference’ numbers in the following fiscal year. This ensures optimal traceability. You have the option to continue with the current series or create a new one. You can generate this new series for general ledgers (Cash, Bank, Giro, and Memorandum ledgers) and for purchase ledgers.

Navigate to [System > General > Settings > Number Settings] in the ‘Financial’ section.
Select the icon to the right of the relevant journal. For sales journals, the first available document number or invoice number is used as ‘Our Reference.’.

The result

Once you have completed these steps, the year-end closing process for the financial department is complete. In addition to the financial department, we also have step-by-step guides for performing the year-end closing process for: