What to Look Into When Closing a Financial Year in Your ERP Software

Closing a financial year in your ERP system is more than flipping a date - it’s about ensuring your books are accurate, compliant, and ready for the next period. Below is a structured checklist of all the important areas you should review and complete before finalizing your year-end close in Arzonell.

1. Finalise All Sales and Purchase Transactions

✔ Complete Invoices & Bills: Check your system for any draft or pending invoices and bills and finalise or delete them so that your revenue and expense figures are accurate for the current year.

✔ Post All Transactions: Ensure that all recorded transactions, such as sales orders, purchase orders, and expense reports, are fully processed and posted before year-end.

2. Handle Bad Debts & Write-Offs

✔ Identify Unrecoverable Amounts: If you have invoices or bills that cannot be collected or paid, use the write-off features to remove them from your receivables/payables so they do not distort your year-end balances.

✔ Record Adjusting Entries: Post the relevant accounting entries for bad debts or vendor credits so the books reflect the true financial position.

3. Reconcile Accounts & Adjust Balances

✔ Bank Reconciliation: Match your ERP ledger with your bank statements to catch discrepancies, uncleared items, or missing entries before the year closes.

✔ Vendor & Customer Reconciliation: Compare your recorded vendor/customer balances with statements to identify missing bills, payments, or credits.

✔ Foreign Currency Adjustments: If your business uses multiple currencies, record year-end exchange rate gains or losses so your ERP reflects true values.

4. Adjust Inventory & Asset Accounts

✔ Inventory Valuation: Review your stock quantities and values, perform inventory adjustments or revaluation to correct discrepancies. This ensures that your balance sheet shows the right stock position at year-end.

✔ Asset & Prepaid Accounts: Check prepaid expenses and fixed assets, allocate the correct portion to the current year and carry forward the rest as appropriate.

5. Review & Post Year-End Journal Entries

✔ Accruals & Adjusting Entries: Make any necessary adjusting journal entries for accruals, depreciation, or prepayments so your books reflect economic reality.

✔ Close Temporary Accounts: Transfer balances from income and expense accounts into retained earnings or similar equity accounts to reset for the new financial year.

6. Generate & Verify Financial Reports

✔ Profit & Loss Statement: Ensure that all revenue, expense, gains, and losses are recorded properly so the profit and loss report shows an accurate view of performance.

✔ Balance Sheet & Cash Flow: Check that all liabilities, assets, and equity balances are correct. Generate a cash flow report to understand your cash position going into the new year.

7. Lock the Previous Financial Year

✔ Prevent Accidental Changes: Once your reports are final, lock transactions for the closed financial year to avoid edits or deletions that could undermine the integrity of your closing figures.

8. Update Numbering & Document Settings

✔ Reset Number Series: Update invoice, bill, purchase order, and other numbering schemes to restart or adjust the sequence for the new financial year.

✔ Update Document Templates: Make sure that footers, headers, and templates reflect the new financial year (e.g., FY2024-25 → FY2025-26) for compliance and consistency.

9. Set the New Financial Year in the ERP System

✔ Financial Year Setup: Update your ERP’s fiscal year settings so new transactions are recorded in the correct year going forward.

✔ Carry Forward Opening Balances: Your ERP will automatically bring forward closing balances (assets, liabilities, equity) into the new year, confirm this to ensure a clean start.

10. Back Up Data

✔ Secure Your Records: Before finalising your close, back up your financial data (to cloud storage and local copies). This protects your records and makes it easier to reference or audit in the future.

11: Compliance & Audit Readiness

✔ Ensure that your books support any statutory tax filings or audit requirements.

✔ Coordinate with your tax or audit advisors to address final compliance checks.

Summary – Your Year-End ERP Closing Checklist

To close your financial year effectively in Arzonell, make sure you:

1. Finalise invoices, bills, and transactions

2. Post bad debt write-offs

3. Reconcile accounts and currency movements

4. Adjust inventory and assets

5. Record year-end journal adjustments

6. Produce and verify financial reports

7. Lock the closed year

8. Update numbering and document settings

9. Configure the new financial year

10. Back up your data and prepare for compliance

Following this structured approach will help you complete your year-end close without gaps, maintain accuracy, and enter the new financial year with clean books.

Reach out to Arzonell.

Completed your bookkeeping for the year? Reach out to Arzonell, our experts will provide a thorough review and handle your Corporate Tax Return submission, all at the best quote in the market.

Reach out to us: info@arzonell.com | +971 52 191 5973