Year-end closing activities are vital for any manufacturing enterprise as a successful closing ensures a smooth beginning of the next financial year. As we step into the final month of 2023 and prepare to usher in 2024, manufacturers have to focus on year-end closing and at the same time, ensure uninterrupted day-to-day operations.
Let us look at the top 10 year-end closing activities
Inventory Assessment
Manufacturers are required to take stock of inventory consisting of raw materials, sub-assemblies, parts, semi-finished and finished goods and compare them with the accounting numbers.
A physical inventory counting is conducted of all the inventory items across the enterprise during employee overtime or non-operational hours. The resultant numbers are then compared with inventory records for discrepancies. Any deviations are recorded and kept aside for further investigation. The records are eventually reconciled with the actual number of items present on the premises. Also, the inventory levels have to be adjusted as a part of the final reconciliation.
OmegaCube ERP’s inventory management module definitely helps manufacturers to quickly perform yearly inventory assessments. They can easily maintain comprehensive inventory records in the ERP along with its movement in and out of the enterprise.
Financial Records Reconciliation
Manufacturers have to ensure that all financial transactions are taken into account. Personnel have to reconcile accounts payable, accounts receivable, bank statements, purchase receipts and general ledger. The balance sheet has to be reconciled and all transactions should cumulatively match the final numbers.
There are many cases where a sales order is created but the shipment happens only after a few weeks or months. If an invoice is created for such sales orders, then it shows an inflated AR which doesn’t give a clear picture.
Therefore, a thorough check of sales order backlogs and associated invoices is needed to ensure a healthy AR and P&L statement.
This is very critical as an accurate balance sheet and financial numbers aid in the year-end auditing process.
With all financial data stored in OmegaCube ERP’s centralized database, manufacturers will be able to easily access and reconcile transactions, thereby saving time and manpower.
Financial Report Generation
Generation of financial reports such as balance sheets, income tax statements, profit and loss statements, sales tax reports, and cash flow statements is a part of audit preparation and year-end exercise. Enterprises have to ensure that all financial statements comply with relevant accounting standards and government regulations.
Manufacturers can instantly generate financial reports in prescribed templates as per the accounting standards from within OmegaCube ERP. As all the data is stored in its centralized database, personnel can easily generate reports leading to immense savings of time and manpower.
Tax Compliance
Along with the financial statements, manufacturers have to ensure that they are tax-compliant by ensuring on-time payments and thorough documentation of sales tax, professional tax and income and state tax numbers. In order to do this, they will have to review and update tax codes along with rates within their ERP software. They will have to generate sales tax reports and reconcile them with the financial statements. Any deviations will have to be corrected and reported for audit purposes. This ensures total compliance with local and international tax laws.
Manufacturers can ensure tax compliance with OmegaCube ERP’s integration capabilities with leading sales tax compliance systems such as Avalara AvaTax and TaxJar. With these, enterprises can easily generate sales tax statements for local and international transactions.
Depreciation and Fixed Assets
Manufacturers will have to review the status of their fixed assets, calculate depreciation rates for each asset and update the new numbers in their system.
Manufacturers can easily record and manage fixed assets data along with depreciation info in OmegaCube ERP. They can manage financial and taxation requirements for each asset automatically with the help of integrated financial reporting and analytical tools.
Supplier Data
Manufacturers will have to go through supplier contracts and check for renewal dates, contract terms, pending supplier invoices, and account payables and receivables.
With OmegaCube ERP’s comprehensive supplier management features, manufacturers can easily access supplier data and check for any changes required.
Employee Records
Manufacturers should review and update employee records such as payroll, medical insurance, performance appraisals, income tax exemptions, profit sharing/shares etc. They should ensure accurate payroll; tax calculations, and generate annual tax statements for audit purposes.
Manufacturers can utilize OmegaCube ERP’s Human Resource module to find, review and update employee records with ease.
Annual Budget Review and Planning
Manufacturers should review their yearly budget and compare it with the actuals to identify deviations. This will help them evaluate overall performance in the current financial year. Also, they will have to prepare a budget for the upcoming fiscal year by collaborating with relevant departments.
With OmegaCube ERP, manufacturers can use annual financial statements and sales forecast numbers to arrive at annual budgets and sales goals for the upcoming financial year.
Strategic Planning
Manufacturers will have to initiate planning for the upcoming year by collaborating with their key stakeholders. They will have to review the overall performance of the enterprise and set strategic goals.
Audit Preparedness
Manufacturers will have to prepare for internal and external audits by ensuring proper documentation is in place. They will have to ensure easy access to accurate financial statements and taxation reports and provide any further data as requested.
Here, manufacturers should ensure the upkeep and maintenance of vital documents such as,
- Balance sheet, income and P & L statements
- General ledger transactions
- Sales invoices and receipts
- Account receivables and payables
- Bank statements
- Contract statements with third-party vendors
- Investments
- Compliance documents
- Tax returns
Apart from this, manufacturers should ensure that all standard operating procedures are followed at each operational phase as auditors closely examine the processes for any deviations. Examples include material procurement from suppliers, engaging contractors for specific projects/tasks, engaging third-party shipping, goods receiving process etc.
OmegaCube ERP with its centralized data storage and comprehensive documentation capabilities allows manufacturers to record each transaction and seamlessly generate statements that can be used for year-audit purposes.
Conclusion
Year-end closing activities can be a real pain for manufacturers if they store enterprise data in silo-ed systems and use manual methods to close the activities. It only leads to immense wastage of time, manpower and money, not to mention the delay in the closure, missing information and eventual wrath from audit authorities.
With OmegaCube ERP’s workflow automation capabilities and power-packed features, manufacturers can easily meet their year-end obligations and close the current financial year at a high.
Are your year-end activities on track and well-prepared for 2024?
