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Year-end procedure. In India, the accounting year is April to March. Accounting year 09-10
has ended on 31st March 2010. Important procedure is given below to plan the
'year
ending' in ERP. The following procedure for ERP
rollout is very important. Due priority should be given by the
stakeholders.
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The procedure will vary depending on your current status as follows:
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1. ERP status is ‘go live’. Users are online and entering
transaction in real-time. The closing stock was already entered.
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2. ERP is being implemented. Conference Room Pilot (CRP) run is done. You
have to decide on the cut-off date. You may think of
considering 31/03/2010 as cutoff date, or any suitable date .
The day after the cutoff date, users go
online. That is 'Go live', and embrace new year 2010-2011 with more accuracy in inventory
management and tighter discipline.
There are two kinds of closing balances that are required:
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Accounts Closing balance: Debtor. Creditors. Closing balance of stock.
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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 pl. take backup. Copy on once writable CD; take the
backup media to another location (different building).
2. Task: Enter closing stock for Inventory items.
3. Count stock. This is one time exercise and should be done very carefully. This is
important for ‘going-live’ from legacy.
4. This is used to enter the closing stock as on the cut-off date, from that
date onwards, DNS ERP will prepare the inventory related books as well accounts
books automatically.
5. E.g. closing balance as on 31 March mid night is opening balance for 1 April.
6. It is strongly recommended that for EACH location stock balance is taken.
E.g. stores, WIP (work-in-prcess), third party, etc.
7. Task: Please take location master printout (excel sheet showing all
locations) from DNS. The list will also show names of sub-contractor locations.
8. Task: Enter ALL items in the item master:
9. Bought out items, raw material, consumables, spares, etc. Items that are
supplied by vendors (supplier).
10. 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).
11. Finished Goods, (FG or product that usually appears in the sales invoice).
12. 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.
13. Use this list (hard copy) to enter closing stock figures in ERP
14. From that moment onwards, every transaction must go thorough ERP.
15. Depending on your judgment, 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.
16. 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 31 Match.
17. You may find items that are physically present but not in the list – enter
in the item master and enter closing balance.
18. Account Closing Balance are required for the following:
• Debtor (customer),
• Creditor (vendor, service provider, and third party) balance pertaining to
09-10 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.
19. 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.
20. 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.
21. You will have to do this exercise for each location. Especially stock lying
with the third party (if any).
22. Print separate list for FG, WIP, Stores items, consumables, packing
material, etc. from ERP software.
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 April 1, 2010.
25. ERP System will allow you to enter 09-10 transactions even in April 2010,
(for this select year 09-10). Finally when the audited bal. sheet is available
one can make a closing JV (may be some time in April / May 10). Whereas the
current year (10-11) transaction can be entered from 1st April itself (these
will be U series).
26. Cutoff date is ‘as on’ date in the cl. Bal. data entry screen.
27. In item ledger and item stock statement ‘From’ date should NOT be less than
cl. Bal. date which is used for entering cl. Bal.
28. User must press ‘enter’ key after entering the cl. balance stock.
29. Once cl. Stock is entered, user should check and if mistake is found, then
enter again; this will over-write previous figure. Once all cl. Bal. is
checked, printed and confirmed then REMOVE access to the cl. Bal. 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
inventory transactions.
31. Closing balance Rate:
• 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 or FG – user should enter ‘cost rate’.
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Note for new ERP project: All open Order Receipt Information (ORI), open
Purchase Order (PO), and open Job Orders (JO) has to be entered as on 31st March
2011. These will be used as parent document for the entry of the subsequent
linked transactions (child document) such as, sales invoice, GRN, or GIN, and so
on.
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Above procedure will be somewhat different for the ERP projects that is
already gone live. For ongoing ERP projects the previous year’s live data base
is used, no need to zap (no dummy transactions) the database. Physical
inventory is taken. Use Stock Adjustment Note (SAN) to adjust the physical
stock and book stock, plus or minus.
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Only in new projects (e.g. going live in 11-12), use a blank database, that is
without any transactions. Zap (delete) all the transactions.
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ERP coordinator should make a
plan in excel sheet, mentioning task (what), name of person
(who) and date (when). Share this with the ERP task-force team.
Email to special email id that is specially given to you so
that DNS helpdesk and implementer / programmer will also know
how you are planning and support users.
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I have been implementing ERP in SME (small and medium enterprises), for last ten years and based on
my past
experience I would like to point out some common mistakes as
follows:
1. Backup is not taken.
2. User is entering stock balance but not creditor balance.
3. It is advisable to enter bill-by-bill closing balance for debtor and
creditors.
4. Stock figures are entered without entering rate.
5. Third party stock is entered on different dates.
6. Material coming and going out is not ‘quarantined’ during the counting.
7. Different cutoff dates are taken for two factories (in case of
multi-location, cutoff date should be same).
8. Previous transactions entered during CRP run (practice entries) are not
deleted (zap).
9. Enough resources are not allocated (more people are required during the
stock taking and entering in ERP).
10. Serious thought should be given to login id and secret password. E.g. who
is authorized to enter SAN, and who is not.
11. SFG (semi-finished goods) items are not entered in ERP item master.
12. Auditors are not involved in above exercise and later some serious flaw is
found, e.g. in rate, or in debtor or creditor position, and so forth.
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