When it comes to delivering reports, this can be often be a stressful time for individuals given the amount of data they are dealing with. More so if you are unsure how to get your ERP solution ready to be able to deliver the reporting that you need it to complete.
This is why in this blog article, we will take you through the steps on how to prepare your ERP solution for Month End Accounting & Management Reporting.
Get your ERP solution prepared!
In order to do this, you need to complete a number of different activities within your finance / ERP solution before you start to create your month end accounting and management reports:
1) Cash and Cash equivalents
- Make sure that you post all applicable cash receipts.
- Do a bank reconciliation by agreeing ending balance per ERP to bank statement.
- Analyse outstanding check list for checks aged 60+ days.
- Analyse prior month un-deposited funds & set deposits to be cleared in the month.
2) Accounts Receivable
- Review, post & distribute all outstanding invoices. After this been completed, make sure that all invoices are posted correctly to the sub ledger and let the revenue team know.
- Analyse accounts receivable aging for any unapplied credits.
- Roll forward prior period Master Billing Schedule as well as make sure that you update the contracts closed in the month.
- Create & analyse AR aging for non-standard terms; work out the current period Days Sales Outstanding (DSOs) to review aging performance.
- Highlight significant account balances that are well past the due date and document collection status as part of the Allowance for Doubtful Accounts (ADA) analysis.
3) Inventory
- Complete a perpetual inventory sub ledger review to make sure that all goods activity confirmations were posted correctly to the General Ledger. Assess & resolve any errors as and when required in an efficient way.
- Assess perpetual inventory listing for reasonableness.
- Organise regular meetings with the CFO, Financial Controller & Head of Operations to discuss the monthly inventory reserve & update the inventory reserve calculation as and when required.
- Establish if any excess, obsolete or planned end-of-life (EOL) inventory remains that needs to be written off completely.
4) Prepaid Expenses
- Make sure that you add current period new prepaid additions.
- Assess all the expense coding along with calculating current period amortisation.
- Get rid of fully amortised items from the schedule.
- Produce a list of current period General Ledger detail and assess whether the monthly amortisation expense aligns with the internal prepaid policy.
5) Property, plant & equipment
- Create fixed assets additions listing from your ERP system & regularly review invoices at random to verify proper asset classification.
- Add any manual fixed assets into the system where required.
- Ask department managers about fixed disposals.
- Update useful lives where required.
- Generate depreciation in your ERP system & check the results for major errors.
6) Accounts Payable
- Produce 3-way match (purchase order/receipt/invoice) along with producing check signature packets.
- Ask for a Statement of Accounts from all applicable vendors.
- Create & assess Accounts Payable aging for non-standard terms.
- Assess Accounts Payable aging for any unapplied credits.
- Assess reconciliation of Open Purchase Orders with FP&A.
7) Deferred Revenue
- Undertake a deferred revenue acceptance analysis by comparing the customer acceptance criteria to the current period standard contracts to assess whether or not revenue recognition criteria have been met.
- Roll forward prior period “Deferred Revenue by Customer” report. Make sure that the beginning balance of current period matches up with the ending balance of prior period & capture all revenue deferred revenue transactions within the General Ledger. Assess this for any non-routine transactions as defined in the Deferred Revenue Memo.
- Produce a “Billings by Customer” report.
- Through the use of current period revenue and current period billings, perform a roll forward by customer & assess the balances for peculiar items.
8) Tax
- Assess quarterly VAT returns and file these before the deadline.
- File each applicable state return for the current period.
- Assess the tax provision with your Financial Controller and record where applicable necessary tax provision.
Once you have completed the above activities, you can then move onto the typical Monthly Financial ‘Check’ Reports which are demonstrated below:
1) Key General Ledger Reconciling Reports
- Accounts receivable reconciliation to Accounts Receivable general ledger account balance for the same ending data.
- Accounts payable reconciliation to AP general ledger account balance.
- Inventory value reconciliation to inventory General Ledger account balance.
2) General Ledger Accounting Balance Reconciling Reports
- The amount column total which is contained in the ‘Goods Receipts Purchase Order’ option of the Open Items List should match up with the ‘Goods Received, Not Invoiced’.
- The amount column total which is contained in the ‘A/R Down Payments – Not Yet Fully Applied’ along with the ‘A/R Down Payments – Not Paid’ option of the Open Items List should align with the ‘Deposit on Customer Orders’ General Ledger Account Balance’.
- The amount column total in the ‘Accounts Payable Down Payments – Not Yet Fully Applied’ along with the ‘Accounts Payable Down Payments – Not Paid’ option of the Open Items List should align with the ‘Prepayments on Purchase Orders’ General Ledger Account Balance.
Next Steps?
If you are struggling or are unsure about the above process or are looking to present data in a more visually pleasing way through our leading financial reporting solutions then please get in touch with our team of ERP experts today to discuss your specific requirements.
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