Hello again from WAC Solution Partners! We are back with a two-part blog about closing accounting periods in NetSuite. In this first part, we will cover how to close a period, and in part two, we will cover how to reopen and edit a closed period.
So what is closing a period and why would you want to do it?
In most software packages, “closing” a period means roughly the same thing, but they do differ slightly. With some packages it may be a simple process, and in some packages it may be complex.
In NetSuite, closing a period changes its status from “Open” to “Closed” and locks it so that no transactions can be posted to any date within the period by anyone (including administrators). It also prevents editing. For these reasons, closing a period should only be done after all posting to a period is complete. It should also only be performed after review and reconciliation to ensure correctness and balance.
For some companies this is a simple procedure and for some it is complex. However, no matter what the size, closing in NetSuite is relatively simple compared to many other software packages.
NetSuite gives you a “Period Close Checklist” to walk you through the closing procedure. Its contents are affected by what modules and features you have active in your system. For instance, Multi-Currency would add a step to the list regarding currency evaluation.
1. Let’s see how to close a period.
a. Go to Setup>Accounting>Manage Accounting Periods
b. The Manage Accounting Periods page allows you to close and open periods, or to set up new fiscal calendars. Closed periods will be marked with a green check under “Period Close” and will display a locked icon to indicate that AP, AR, and GL are all locked.
Open periods will not have a check and transactions will appear unlocked. Because periods are closed sequentially, this means that any checked period before the latest checked period is closed.
c. The first step in closing the period is to click on the checklist.
d. This brings you to the checklist for that period. Please note that because we are using a demo environment and reopening previous periods for demonstration purposes, the status is listed as “Reopened”.
e. Begin clicking through the items on the checklist. The first item, Lock A/R will bring you to this page.
f. Check the boxes and hit “Submit” to save your work. This locks AR for the checked companies for the selected period. Note that our demo company has multiple subsidiaries. If you only have one entity in your system, you will only see that entity.
g. You will be sent back to the checklist. A/R will now be marked as locked.
h. You may then close the items listed before “Close” in any order you like. However, certain items may have prerequisites that need to be completed before they may be closed. These items are greyed out, and hovering over them with your cursor will tell you what needs to be done in order to close them.
i. Lock All” is a misnomer, as it actually means the GL.
j. “Resolve Date/Period Mismatches” allows you to correct transactions that are dated wrong. For instance, if an invoice is posted to the wrong month. Clicking this will cause NetSuite to look for mismatches in the transactions for the period. You can then click the Edit links to resolve these discrepancies.
k. Note that when you create transactions, those transactions will not automatically post to the proper period if that period is not set up in a fiscal calendar. This means that if you are trying to post in 2018 but have not created any 2018 periods in NetSuite, then the transactions will post in the wrong period.
l. The final step is to click “Close” at the end.
m. After this, click “Close Period”.
n. The period is now closed.
o. If you go back to the main list, you will see the closure reflected there, as well.
As you can see, NetSuite makes closing periods a fairly simple task and offers several tools with which to manage them.
Please read our next blog on reopening accounting periods and the use of the “Quick Close” routine.
We hope that this blog was useful to you. If you have any questions about closing periods or any other NetSuite topic, please contact us by Clicking Here!