Closing Financial Periods in SAP Business One

When you’re busy—and you’re always busy—you don’t want to waste time on tasks that don’t add value to your business. That’s why your business must make it a priority closing financial periods in SAP Business One.

Why it’s good practice to close each period

Closing each period in SAP is good business practice, for several reasons:

• Accounting –  Closing the period allows you to record that period’s transactions in an organized way for easier retrieval later as needed. It will also help ensure transactions are recorded correctly, regardless of how they were entered into the system. And it avoids intentional or inadvertent back-posting of transactions. Finding and correcting any discrepancies sooner than later will make the year-end closing process run more smoothly, too.
• Reporting – Closing financial periods means you can be confident that the period-end reports you run will be accurate. This is critical to ensuring budgets, forecasts, planning, and reports to internal and external stakeholders reflect correct, up-to-date information.
• Cash flow management – Since closing periods provides an overview of cash flow during each month, quarter, or year, it gives companies the information and insights they need to make smart financial decisions. Closing your financial period also makes the scheduling and execution of payroll, rent, and other items easier and simplifies year-end reconciliation.
• Reconciliation – Closingperiods enables companies to reconcile transactions from other systems, such as bank accounts, with those in SAP.

Closing a financial period in SAP Business One

Closing a period in SAP Business One is a critical task that requires careful attention to detail. Before you begin the period-end closing process:

• Back up your company database. This will ensure that you can recover data, should any be lost during the closing process.
• Ensure all users are logged out of the system.

To close a financial period in SAP Business One, follow these steps:

1. Make sure that all transactions related to the current period are complete and have been recorded in the system.
2. In the SAP Business One main menu, go to Administration > Utilities> Period End Closing.
3. Select the period that you want to close and the period closing GL and the Retained Earnings GL.
4. Approve the Accounts that you want to include in the Period End Closing.
5. Execute the Period End closing. SAP Business One will start the process. This  includes several steps, such as reconciling accounts, posting closing entries, and updating account balances.
6. Review the Journal Entries to confirm all looks as expected.
7. Go to Fiscal Year Change and set the new fiscal year. Once the period-end closing process is complete, you will be prompted to create a new period.
8. After the new period has been created, you can run reports to view the financial statements for the closed period.

Conclusion

Keep your business running smoothly by ensure you close your financial periods in SAP Business One. It’s a good business practice that helps you ensure your financial information is accurate and up to date, gives you confidence in your financial reporting, and avoids surprises when making important decisions.