Year End Procedure – Dynamics 365 Finance – Bye bye 2020

Year 2020……. I don’t want to discuss in detail but as we know, it’ worst year in human history in last century. We lost too much, in terms of human life, Jobs, Travelling, habits, etc. in the year 2020. The only thing we haven’t lost is “HOPE”. We all have hope that everything will be fine in 2021 or year after that. That’s what we call “Strength”.

As a human it’s in our nature to learn and adopt all new situation. We have changed our lifestyle in this year for sake of survival. We fight together against “COVID-19” and survived. Now it’s time to continue our journey with all possible precaution for our and our loved once health.

We learn in 2020 that health is most precious, even against wealth.

I wish you achieve all milestone you have defined for Year 2021.

Be Positive & COVID-19 Negative……. Happy New Year

Let’s start the topic for which you are here, Year end process in Dynamics 365 Finance

Before we start from System point of view, lets discuss what exactly Year end closing is.

Year end Closing:

All Financial books needs to be close at the year and to find true performance of company in previous year and Publish Financial Statements . Normally Financial Statements normally contains “Profit & Loss Account / Income Statement” , “Balance Sheet / Statement of financial position” , “Cashflow Statement” and “Statement of changes in equity“.

All this document generated from “Trial Balance”. So every year Accounts, which is part of Profit & Loss Account / Income Statement require to close and Transfer to “Retain Earning” which is part of “Balance Sheet / Statement of financial position” & “Statement of changes in equity”. And Other accounts require to be transfer as Opening Balance in Next year.

Now, Let’s understand how we do the same process in “Microsoft Dynamics 365 Finance

First we need to check General Leger parameter as it will driving the entire process of Year End Closing.

General Ledger Parameters :

General Ledger Parameter – Year End Closure

As you can see in above picture, you have to make sure all parameter is setup. I have provided configuration which I considered as best practice. You can change if you require but please make sure you know the impact of each parameter. Such as “Set Fiscal Year Status to Permanently Closed”, if you select yes, system will close the Financial year’s period as “Permanently Close” which means, you want be able to open again and there won’t be any changes possible in past period, so please be careful with this parameter.

Once those are configured, go to General ledger> Posting setup> Accounts for automatic transactions

Accounts for Automated Transactions – For Profit Transfer

This is require as system has to identify the account for transfer of all profit and loss account’s balance.

Check to make sure you have a fiscal calendar created for the following year (2021). If not create before further process. As we need opening balance in next year (2021).

There are certain other process also but I am not going to explain in this blog, such as “Closing Period Adjustments”

Other Closing Process

Now that we are all setup, let’s go to General ledger> Period close> Year end close

Group – Year end close

As you can seen in this screen, you can create multiple groups based on Financial Calendars. In this case I have created Group for US based companies which follows same Financial Year (Jan-Dec). In one group you can add multiple legal entities and you can define Transfer of Balance sheet combination for each legal entity.

Transfer of Dimension:

if you want to transfer balance sheet dimensions or not by toggling the switch.  This is optional, but it is considered best practice to have switched to Yes.  Also, determine which dimensions for profit and loss accounts you would like to transfer.  The Close all option will close all dimensions used for that main account and dimensions.  So, if there were multiple transactions to the same main account, but to different business units, this option would create opening balances for each main account – business unit segment.  If you choose Close one then you must select the financial dimension to close to.  The financial dimension you close to will take all the transactions from the main account – business unit segment.

Year end process

Now you can “Run fiscal close” and select Single or Multiple Legal entity from selected group.

YE form – Parameter

As you can see that in parameter form you have to Select The year which you want to close and provide voucher number manually. This transaction will be recorder in “Year 2020 – Period :Closing” and “Year 2021 – Period : Opening”

You can do this process as many time you need, as There was parameter in General Ledger Parameter that delete previous closing transaction, as well as we also have option to reverse original transfer during next transfer wile running Fiscal year closer

Once you complete the process, Now run the trial balance and you will find all closing balance of Balance Sheet item has transfer as opening in new year.

Thanks,

Gaurangkumar Jani

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