Mastering the Month End Close Process with NAV: The General Ledger

As with other ERP solutions, the month end close process in Microsoft Dynamics NAV is unique. This series leverages what is unique to NAV in order to help you draft your own period-end checklists and covers the following areas:

• The General Ledger (this blog post)
• Accounts Payable and Accounts Receivable
• Bank Reconciliation and Re-Evaluating Foreign Exchange Balances
• Fixed Assets and Inventory

In the first post in this series, I’ll outline how to perform month end close tasks related to the General Ledger, including: setting up standard and recurring journal entries and limiting posting dates.

A standard journal allows users to save frequently used adjustment journal entries to a template defined by a unique code.

This helps to reduce the amount of time required to perform data entry at month-end and provides a way to manage entries that are posted on a regular basis (i.e. payroll, loan interest).  When a template is created, the user has the option of including the amounts entered on the journal if needed.

The steps for entering and posting a Standard Journal entry are:

• Create the journal entry lines with the required information (i.e. posting date, document no., account, description, amount, and dimension entry if applicable)
• Click on “Save as Standard Journal” in the ribbon. In the pop-up window that appears, enter a unique code and description for it (i.e. LOAN INT).  Select the “save unit amount” field if you want to save the values in the amount field of the standard journal. Click “OK” to save.
• To post the entries using the Standard Journal, click on “Get Standard Journals” in the ribbon.
• Select the relevant code. Click OK.  The system populates the lines in the journal then click Post.

Often, when finalizing a month, there are a series of recurring journal entries that need to be posted – whether it’s a manual entry of amortization, insurance, payroll items, rent allocations, or any other entry that needs to be posted month-after-month with similar accounts, and so on.

Within NAV, the Recurring Journal activity can be used for this purpose. Recurring Journals are used for managing transactions that are posted frequently with few or no changes. As with the Standard General Journals, the lines entered in the Recurring Journal batch are retained after posting.

To set up a Recurring Journal in NAV:

• Go to the Recurring General Journal activity either by using the search function or navigating to Departments > Financial Management > Periodic Activities > General Ledger;
• Create a Journal Batch and give it a meaningful name and description; like “ _____”

• Edit the batch and create your entry as you would a normal journal entry, with the following additional components:
  • Recurring Method – this is where you define what kind of recurrence it is;
    • F (Fixed) – uses a fixed amount (e.g. $100.00) and retains that after posting;
    • V (Variable) – uses a variable amount (e.g. $100.00) and deletes that amount after posting;
    • B (Balance) – uses the entire balance of an account, allocated among the accounts specified in the Allocations worksheet (accessible on the ribbon);
    • Reversing F/V/B – same as above, with a reversing entry put through the day after the posting date (used principally for accruals);
  • Recurring Frequency ­– formula for updating the next posting date after this one;
    • 1M = 1 month (
    • 1D = 1 day
    • 1D+1M-1D = last day of the next month regardless of how many days in that month;
    • Use the Help function in NAV to see more options
  • Expiration Date – the last date that the entry can be posted (i.e. when recurrence should end);
• With Document No. and Description, you can use wildcards to update these fields with the date information. For example:
  • %1 – posting day number | e.g. “Dec %1 Insurance” à “Dec 31 Insurance”
  • %2– posting week number | e.g. “Amort. – Week %2” à “Amort. – Week 52”
  • %3 – posting month number | e.g. “Rent %3/14” à “Rent 12/14”
  • %4 – posting month name | e.g. “Expenses – %4 2014” à “Expenses – December 2014”
  • %5 – posting account period name (pulls from the Accounting Periods descriptions)

After posting you will see that the dates are automatically updated:

When periods are closed in most software, they are either hard-closes or soft-closes. Hard-closes are periods that are permanently committed to the entity’s database and are locked beyond ability to post to.

It is important to note that the Microsoft Dynamics NAV solutionis a real-time ERP and does not, technically, have “hard-close” for a period end. The only way a month gets hard-closed is when you perform the year-end closing. As a result, the procedures outlined in these posts will demonstrate how to use soft-closing to administer your accounting records appropriately.

Note: Closing a period should happen after all your entries, invoices, bank reconciliations, adjustments, etc. for the period have been processed, as the closing process prevents posting to that period. This emphasizes the importance of ensuring that both internal procedures and system processes are aligned.

To ensure integrity of data and reporting, you’ll want to be able to prevent posting to a period after all the necessary adjustments and entries have been posted to it.

There are two areas where you set the allowable posting dates:

• The overall General Ledger settings – this is where a blanket rule is applied to all users of the system;
• The individual user’s settings – this is where you can allow specific individuals to have access to periods outside of the General Ledger settings above. This may be appropriate for a Controller or Assistant Controller, who are all responsible for making adjustments of closed periods in a thought out and deliberate manner.

You can set the allowable posting dates for all users of the system:

• Go to General Ledger Setup by either using the search function or by navigating to Departments > Financial Management > Setup > Administration;
• Enter dates into the Allow Posting From and Allow Posting To fields to create a range of allowable posting dates (Note: leaving a field blank will allow any date);

Click OK;

To have specific override rules for an individual, you can set this:

• Go to User Setup by using the search function or navigating to Departments > Administration > Application Setup > Users > User Setup;
• Click “Edit” on the user’s ID (if user is already in the list) or click “New” and select the User ID from the field drop-down;
• Enter relevant dates in the Allow Posting From and Allow Posting To fields (Note: any fields left blank will inherit the rules from the General Ledger Setup above);

Click OK