How to perform the annual SAP Business One closing?

We explain step by step how to perform the annual period closing for SAP Business One and the possible errors you may encounter.

As the year comes to an end, so does the time to perform the much-needed year-end closing for SAP Business One. The financial year-end closing is an annual process that is crucial for the continuity of the financial process.

Benefits of the annual period closing

Within accounting, the period closing allows you to have a record of transactions in the database in an organized way so that you can easily retrieve information.

It also guarantees that transactions are recorded correctly, regardless of how they were entered into the system. In addition, closing the financial periods helps you ensure that the end-of-period reports you run will be accurate, guaranteeing the company that budgets, forecasts, planning, and internal and external reports reflect correct and updated information.

Closing the fiscal year consists of an annual balance sheet, an annual income statement, and an appendix with additional information (annual report), which must be created to comply with the legal obligations we have in Mexico. Before being able to close a fiscal year in financial accounting from an accounting perspective, it is necessary to carry out preparatory measures in the asset accounting.

How to close a fiscal year in SAP Business One

As a first step, it is important to start in the Management module, and visualization of the system of accounting periods, and once inside, check that the periods to be closed are in closing mode.

This means they must have the closing option active or not be blocked. If the periods we need to close are blocked, the annual closing cannot be done.
Something we must take care of within the finance module, in the income chart of accounts, is that all our accounts must be valid to carry out the process. Verify that they are not inactive.

For the purposes of the closing, two accounts must be enabled:

• One where the result of the profit and loss accounts will fall
• And another that will be the closing account for the balance sheet accounts

Once the accounts are ready and we have the periods unlocked and/or in closing mode, we go to the Management Module, in the Utilities section, and select the option: Period Closing.

In this section, the accounts from the catalog must be enabled, as well as the business partners section. We select the period to close and indicate to the system the account assignment.

Once we have selected the accounts and the periods that are ready to perform the closing, we select the execute option: that is where the system opens the window with the listing of account postings.

For the purposes of the final balance, we can put references and due dates and documents; once the above is done, the accounts with movements are selected and the process is executed.
Likewise, there is an option to execute it later, simply by saving the information that we have already

When we execute the closing process, the system makes the postings. Upon completion of this, we can review in the finance section within the account catalog, the profit and loss account for the corresponding year and see the results obtained.

If the closing is done correctly, the balance sheet account should be in zeros. If there are any balances, it means that there is some posting for which the closing was not done in some accounting account.

 

 

Error handling during year-end closing

Next, we will explain some of the errors that can occur during the year-end closing, along with the methods to correct them.

Errors due to depreciation calculation

If errors occur in amortization, select the Recalculate values function in the fixed asset master data. You will probably receive an error message with additional textual explanations or the error will be corrected by recalculation.

Once the error has been corrected, the planned amortization values may have changed. Therefore, you can run another amortization posting execution.

The planned depreciation was not fully recorded in the general ledger.

If the depreciation has not been posted in its entirety, perform a depreciation posting execution.

The balance sheet values were not fully recorded in the general ledger.

In this case, perform the periodic posting of the balance sheet values.

The capitalization date was not set.

If the capitalization date has not been set, verify that all asset classes for construction in progress assets have been entered correctly on the initial screen of the year-end closing transaction.

It is normal for construction income and expenses to not be capitalized. When you enter the asset classes for construction in progress assets on the initial screen, these assets are exempt from the verification to see if assets are capitalized.

If the assets with this error are not construction in progress assets, manually configure the capitalization date in your master records. Then, perform a depreciation posting execution.

Errors in the insurable base value update.

The problem is usually that index figures are missing for the exercise being closed. Update the missing index figures. Go to the asset master data update and enter the insurance data screen and select the change exercise function.

Index series do not exist.

For the indexed insurable base value to be updated, it is necessary to maintain the index series corresponding to the fiscal year being closed. If index figures are not available at the time of year-end closing, estimated index figures should be used. When the correct index figures are available, the year-end closing should be reversed and performed again.

Incomplete assets.

All incomplete asset master records identified during year-end closing must be completed. There is a special report to select incomplete assets and analyze the reason for their incompleteness.

 

If you have any questions regarding your SAP Business One year-end closing, do not hesitate to contact us and we will guide you in Xamai in your process.

 

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