31 December - or 31 March in India - are important dates.
Due priority should be given by all
stakeholders on 31st March in India.
In India, the accounting year is April to
March. Accounting year 12-13 has ended on 31st March 2013. Important
procedure is given below to plan the 'year ending' in ERP.
Due priority should be given by the
stakeholders. There are two kinds of closing balances that needs to be
Accounts closing balance: Debtor and Creditors / Assets and Liabilities. Closing balance of stock. For efficient supply chain management it is necessary to record physical
stock of all locations such as depot, warehouse, godowns stores, cold
storage (if any), CFA, distributors, and so on.
It is important to note that both inventory and accounts are tightly linked
in ERP. FAQ: "Can we enter creditor / debtor balance and closing stock,
later?" The answer is NO.
Step-by-step procedure to GO LIVE is as follows:
1. Before doing anything take backup. Copy on once writeable CD; take the
backup media to another location (different building). 2. Task: Enter closing stock for Inventory items. 3. Count stock. This exercise should be done very carefully. This is
important for ‘going-live’. 4. Enter the closing stock, as on the cut-off date, from that date onwards,
ERP will prepare the inventory related books, as well as accounts books,
automatically. 5. E.g. closing balance as on March 31, mid night is opening balance for
6. Task: Enter ALL items in the item master. It is strongly recommended that for EACH location stock balance be taken.
E.g. stores, rejection location, scrap location, WIP (work-in-process),
third party (subcontractor location), etc. 7. Task: Take location master printout (excel sheet showing all locations)
from the ERP (not from Tally). The list will also show names of
subcontractor locations. 8. Bought out items, raw material, consumables, spares, etc. Items that are
supplied by vendors (supplier). 9. Sub-assemblies, semi-finished goods, factory made item, etc. This may
include items that are received from third party, if it is semi-finished
goods. (WIP). 10. Finished Goods, (FG or product that usually appears in the sales
11. Task: Prepare the Item list using ERP software instant excel sheet
option. You can prepare category, sub-category wise, separate list. Give to
concerned person to take physical stock (count) and write on the excel sheet
itself, put date and sign. This is strongly recommended to avoid confusion
of item code / description. 12. Use this list (hard copy) to enter closing stock figures in ERP. 13. From that moment onwards, every transaction must go through ERP. 14. Depending on your judgement estimate time required to do the physical
count and the exercise to enter the data in ERP. This will depend on number
of persons allocated for the task. 15. During the stock taking activity, there should be NO material movement.
All goods inward and sales issue has to be suspended. For instance some
companies would like to do this exercise on 1, 2 and 3 April and start the
year on 4 April 08. Some companies stop the manufacturing activity on 30 and
16. You may find items that are physically present but not in the list –
enter in the item master and enter closing balance. 17. Account Closing Balance are required for the following:
Debtor (customer), Creditor (vendor, service provider, and third party) balance pertaining to
11-12 balance will be carried forward automatically. Pass JV (cr. Note or debit note if necessary to get the correct balance).
Make sure the bank-reconciliation exercise is done well in time for ensuring
correct ‘Trial Balance’ statement in ERP. 18. In case you have already gone “Live”: Count physical stock for each item and write on the excel sheet printout,
next to ERP stock statement (book stock) figure. Ideally, both should be
same. If not write the difference (plus or minus). You will have to get
explanation from stores-in-charge and pass SAN (stock adjustment note) to
get the book stock same as physical stock. 19. You may find item that are shown as stock in hand but there is no such
item. Check that there is no confusion in item name. Any case one must
reconcile the stock.
20. You will have to do this exercise for each location. Especially stock
lying with the third party (if any). 21. Print separate list for FG, WIP, Stores items, consumables, packing
material, etc. from ERP software. 22. You will need people so plan in advance, inform your team (staff), this
is not one or two persons task. More people are required depending on number
of location, size of the inventory, and so on. 23. At the time of login, into the ERP, select appropriate year (the first
screen where you give log in name and password). 24. New document number series will start from the New accounting Year –
e.g. April 1, 2012. 25. ERP System will allow you to enter 11-12 transactions even in April
2010, (for this select year 11-12). Finally, when the audited Balance Sheet
is available one can make a “closing JV (Journal Voucher). This may be
sometime in April / May 12. Whereas the current year (11-12) transaction can
be entered from 1st April itself (these will be in new document series). 26. Cut-off date is ‘as on’ date in the Closing Balance data entry screen. 27. In item ledger and item stock statement ‘From’ date should NOT be less
than Closing Balance, date that is used for entering closing balance. 28. User must press ‘enter’ key after entering the closing balance stock. 29. Once closing stock is entered, user should check, and if mistake is
found, then enter again; this will over-write previous figure. Once all
closing balance is checked, printed and confirmed then REMOVE access to the
closing Balance menu-using user manage. No one should enter again cl. Bal.
because this is one time exercise. 30. Only after disabling, the cl. Bal. menu user should be allowed to enter
31. Closing balance Rate or value:
While entering stock closing balance, user also should enter rate. This is
required to calculate the value. For item that are purchased from outside – pl. enter the Weighted Average
Rate (WAR) rate (weighted average rate), or last purchase Rate, if WAR rate
is not available. For all factory made items – SFG (Semi-Finished Goods or sub-assemblies) or
FG (Finished Goods)– user should enter ‘cost rate’.
Video lecture (excerpts) about the year ending.
Learn how other companies (e.g. FMCG) are
benefited, from Case study given in the presentation published here
ERP in FMCG - Fast moving consumer
goods - Case study video clip:
Marico, ITC, Emami.
"Emami’s recent investment in I. T. has
ensured finalization of its balance sheet in a record 35 days against
the 60-day norm".
study video clip: Marico, ITC, Emami. "Emami’s recent investment in I. T. has ensured
finalization of its balance sheet in a record 35 days against the 60-day