Within the ACR system there are a number of month end processes that need to be completed each month to help keep your system up to date.
The four monthly processes that need to be run are:
- Debtors/System, month end.
- Banking Month end/ Bank Reconciliation.
- Creditors Month end.
- Accounting Month end.
Each of these Month end processes relates to a unique part of the ACR system. As a general rule the order that you would run them is; Debtors month end, Bank Reconciliation, Creditors Month end and then finally the accounting moth end. They do not need to be run all on the same day and it is uncommon for them to be run all on a single day. Most people will stagger them over the course of the month to align with when you have received all information needed to be able to close off the month.
Checks have been put in place within ACR to try and help prevent people accidently running the wrong month end process. These checks are run when you select the active button on a month end. If you try to run a month end process within 15 days of the last time it was run it will warn you of this.
Debtors Month End
This process must be run sometime between the close of business on the last trading day of the month and start of business on the first trading day of the new month. Most companies will run it straight after running the day end process on the last trading day of the month. This process finalises debtor information for the month, then archives the sales and stock movement transaction getting them ready for running reports such as the Debtors Statements.
Steps for running Month End
- Run your normal Day end process. Do not change the system date if you normally do this manually.
- Open the Month end menu. This can be found under ToolBox>Maintenance> System Month End Procedure
- Run the Debtors Payment Allocation.
- Run the Debtor Reconciliation . These figures will show as inclusive of GST figures as the balance that the debtors owe will be the inclusive of GST balance.
- Run the Age Trial balance.
- Month/Year end Reset Sales.
- The final step of the month end process is to run the Archive Month end.
This completes the actual Debtors month end process. Most sites would run their Debtor statements the next business day but Statements do not make up part of the month end process that the system requires.
Bank Reconciliation
The second of the ACR month end process is the Bank Reconciliation. This is in effect the Banking system Month end. Each bank account you have setup in ACR should be reconciled at least monthly. The Default bank account must not be more than 3 months behind the debtors system.
Before you start to complete a banking month end/ bank reconciliation you will need to have a copy of your bank statement, you will be reconciling the entries that the ACR system has on record to the entries that your bank statement has. The reconciliation tells the ACR system that entries it has have now appeared on the bank statement and can stop being shown in the Bank reconciliation. To start the bank reconciliation open the menu item named bank reconciliation. Then you can flag items that have appeared on your bank statement by selecting the Flag checkbox next to the item. Once you have flagged all items that you already have in ACR that appear on your bank statement you can then enter items that are on your bank statement but not yet in ACR. This can be done using the Cash Payments and Cash receipts buttons in the Bank reconciliation screen. Examples of items you may need to add are bank fee’s or Direct Deposit payments that you have not yet entered into ACR.
Once you have flagged or entered all items that appear on your bank statement you will need to select the Accept batch button. This locks the information in ready for the reconciliation. To start the Reconciliation you will first need to do a test reconciliation. The test reconciliation can be performed as many times as required in preparation for the actual reconciliation. To start press the Test Rec button. In the Statement balance field enter the balance as it appears on your bank statement. Then select OK. This will show you the reconciliation.
It shows the following:
- Cash Book Balance
- Plus unpresented checks
- Less Outstanding Deposits
- Statement Balance
If the Cashbook balance plus the unpresented cheques and less the outstanding deposits equals the Statement balance it will state Reconciliation is in balance.
If it does not match it will say how much the Statement balance should be, What the Statement Balance is and what the Difference is. This will then allow you to find what makes the difference up and correct it before doing another Test rec
Once the entered Statement Balance and the expected statement balance are equal you can click the OK button it will ask you “Ready for real Reconciliation?”. If you are ready select Yes, if you select No at this point it will stop the Reconciliation.
Once you select yes, it will print the following reports for your records.
- Cash Book
- Cash Payments Journal
- Cash Receipts Journal
It will then print the last page of the reconciliation and clear the data.
At this point selecting OK will complete the reconciliation, pressing abort will restart it.
This is the banking month end completed. Your bank account will now be showing entries for your new current month.
Creditors Month End
The Creditors Month End process can be run at any time during the month you wish. It is normally run around two weeks after the debtors month end. This is to give time for your creditors to send you any outstanding invoices and statements ready for you to pay. It can be run up to 1 month ahead of the debtors system however cannot get more than 3 months behind the Debtors system.
The creditors month end does not need exclusive use of the whole system but does need exclusive use of the creditors system, this includes making changes directly to suppliers, processing payments to suppliers and doing stock receipting while the Creditors month end is running. This means it is possible to run this while other people keep processing sales as long as they do not directly affect the creditors system.
The Creditors Month End Procedure can be found under the creditors menu. This is again a matter of following the menu from the top to the bottom in order.
- Run the creditors Payment Allocation.
- Purchase Journal Entry.
- Run the creditor Reconciliation – These figures will show as inclusive of GST figures as the balance that you owe your creditors will be the inclusive of GST balance.
- Run the Age Trial balance.
- Month / Year end reset Creditors
This is the Creditors month end process completed. There is no archive month end for Creditors. Once you close the Month/Year end reset creditors the system is ready for use in the new month.
Accounting Month end
The Accounting month end is the last of the standard month end processes. This closes off the General Ledger system within ACR. It is not uncommon especially for the month end of June to July for the Accounting month end process to be run weeks or even months after the end of the actual month you are closing. This is to allow journals to be entered that are dated the current open month.
When running the accounting month end it is important to have run the debtors, creditors and all banking system month ends before doing the accounting month end. This is because each of these other month ends feed information into the accounting system.
To run the Accounting Month end simply run the Month / Year End Reset Accounting from the Financials menu.
Once you have complete all four of these month ends for each month your system will be fully ready for you to report on and extract information about how your business is doing.
To watch our Webinar on performing the Month end processes please see our blog article Month end processes – the how, what, when and where