Record to report / R2R – General Accounting – Book Closures

The fundamentals of a book closure and its importance was shared in the last post.

Book closures translate into financial summaries. Book closures are a seasonal process, you need two to three days after the fiscal month has ended. So, creating a separate team just for book closures is usually not recommended. The general accounting team normally dedicate themselves during the close period.

This process is normally executed in a predefined sequence. The cash modules are closed first. Once these are closed, no entries can be made for the period closed. After this normally the accounts payable module is closed, followed by the accounts receivable module. Then comes the journal module and finally the general ledger.

As each module is closed, books / modules for the next period are opened.

The closure procedure needs to ensure that all possible entries pertaining to that module have already been passed. Once this is done, the closure procedure is triggered with the click of a button on the ERP system for that module.

Quite often, this trigger generates one or more errors. A log is extracted and corrections need to be done before moving to the next module. An imperfectly designed ERP system will surely have a lot of such errors. These errors normally reflect hanging entries, which could not be completed, either not saved properly, or generated due to system errors. Correcting some of these could be a nightmare sometimes.


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