Re: Automating Month-End

Dear Bill,

My response to your query is off the mark here:  I am responding to your
disbelief that month and processing is not automated and sharing some of my
knowledge on month end closing with the fraternity.

Primary reason for this is historical.  In the past, JBA used to sell
individual applications to customers and these individual applications used
to work independently as well as a suite of a module.  For example, in the
past - about 10 years ago - you could buy Accounts Receivable only and
integrate it with any other applications of your choice. This explains the
existence of the standard interface programs that come with AR & AP and
that wonderful AFI application.  Due to this reason appropriate
applications had their own month end processing routines.

Later the strategy changed and these applications got closely knit to each
other but many of the month end processing routines were not changed,
especially in finance, in order to maintain backward compatibility.

(All this was told to me by some of my ex-bosses in JBA during informal
discussions.)

Nowadays, to my knowledge, the following applications need month end
processing:

a. Inventory Management
b. Fixed Assets
c. Accounts Receivable
d. Accounts Payable
e. Cash Management
f. General Ledger

The calendar in Inventory is used to control all applications in Customer
Services & Logistics module.  This gives much flexibility to the finance
people.  How?

By doing a month end in Inventory (a very simple task not taking more than
a minute), all operational transactions like sales order booking, purchase
receipts, invoicing etc of a business are stamped with correct period
numbers while the finance dept. of a company can go through & prepare the
accounts for the past period (or cook them, depending on one's perspective)
at leisure.

Like Inventory, Cash Management too can be closed independently.  For
others, there is an order: You must close Fixed Assets first (if you are
using it), then AR or AP and finally GL.  GL cannot be closed without
others being in the next period.

During the month end processing, the system computes the year to date
figures and updates the appropriate tables and performs two important
checks: One is on AR, AP control accounts with the AR & AP balances.  If
they are not balanced, the system will produce a report and will allow you
to proceed with closing provided it is not an year end.  If the month you
are closing is an year end, then it will not budge any further.  You got to
resolve the imbalance before you can close it.

The second check is on the rounding errors account.  If this account has
any balance, then the system will prevent you from closing the month.

So is it possible to automate the month end processing? Yes, it is possible
but personally I believe manual closing gives you better control.

Regards,

S. Ram