0:05 Hey dear odoers, the fiscal year has
0:07 ended for Bloom and it was a pretty good
0:10 one. As the new fiscal year is starting,
0:12 we need to close the previous one.
0:14 Closing a prior year is a crucial step
0:17 in generating financial reports as it
0:19 enables the analysis of financial health
0:21 and provides investors with an accurate
0:23 picture of the company. Here are some
0:25 best practices to help you prepare for
0:28 the fiscal year's closing. Make sure all
0:30 bank accounts are fully reconciled up to
0:32 year end. And confirm that the ending
0:34 book balances match the bank statement
0:37 balances. Confirm that all customer
0:39 invoices and vendor bills have been
0:41 created and all draft entries have been
0:45 either confirmed or cancelled as needed.
0:47 Ensure the accuracy of all expenses and
0:50 validate them. Check that all received
0:51 payments have been encoded and
0:55 confirmed. Close all suspense accounts.
0:56 Ensure your loans are properly
0:59 registered for automatic amortization calculations.
1:00 calculations.
1:03 Review overdue payables and receivables
1:05 aged over 60 days and assess whether
1:07 provision for uncertain liabilities or
1:09 an allowance for doubtful accounts is
1:12 required. And finally, book all
1:13 depreciation and deferred revenue
1:16 entries. The good news is ODU
1:18 automatically rolls up the profit and
1:20 loss statement, meaning it displays the
1:22 net of our income and expense accounts
1:24 in the unallocated earnings section of
1:27 the balance sheet. So, all that's left
1:31 for us to do is allocate those earnings.
1:33 Here we are on our database. Let's go
1:36 into the accounting app and we'll go to
1:39 configuration and settings. And here
1:42 we'll search for fiscal.
1:44 And down in the fiscal period section,
1:46 the first step is to set a fiscal year
1:49 end date. In our case, it's December
1:52 31st, but you can change it to fit your
1:54 needs and your financial reports will be
1:56 updated automatically.
1:58 In our case, it's already set, but if
2:01 not, don't forget to save.
2:03 If you started your business in the
2:04 middle of the fiscal year or if your
2:07 fiscal year is longer than 12 months,
2:09 you can set one manually by enabling
2:12 fiscal years. And then you can click on
2:15 fiscal years to set specific start and
2:17 end dates.
2:19 That's all we need for the fiscal year
2:27 Now we need to allocate our unallocated
2:30 earnings. First, let's check our profit.
2:32 We'll go to our profit and loss
2:35 statement under the reporting menu and
2:36 we're in the Belgian localization now.
2:38 So, we're looking at the Belgian profit
2:40 and loss statement, but we can easily
2:42 switch to a generic version of the
2:44 profit and loss statement as well. And
2:47 if we look at it as of the end of the
2:51 previous fiscal year, we can clearly see
2:53 last year's total income, total
2:55 expenses, and our net profit of $59,153.50.
3:02 And we can find that same value if we go
3:06 to reporting to our balance sheet. And
3:08 we'll also set this to the generic
3:12 version and to the end of 2025.
3:15 And here we'll look at the profit of the
3:19 year where we'll find that same amount 59,15350.
3:26 We're going to copy that amount and go
3:29 to our accounting menu and to journal
3:32 entries to create a new entry. And we'll
3:35 name it something recognizable like year
3:38 closing 2025.
3:40 And we're going to change the date to be
3:43 the last date of the previous fiscal
3:46 year. And in our case, we'll be using
3:48 the corresponding Belgian accounts. So
3:49 make sure to use the ones that are
3:52 suitable for your fiscal localization.
3:54 For a profit in Belgium, we'll add a
3:59 line with the account 140,000 profit to
4:02 be brought forward and we'll paste that
4:04 amount that we copied in the credit
4:07 column. Then we'll add a line with the
4:10 account 693,000
4:13 profits to be carried forward and we'll
4:16 paste that amount in the debit column.
4:18 This is a pretty simple example where
4:19 we're just moving the profits into an
4:22 undistributed profits account, but this
4:24 is also where we could split the profits
4:26 into different equity accounts if we
4:29 wanted to. But for our purposes, we are
4:31 ready to post.
4:33 And we just recognize our earnings in a
4:36 balance sheet account. And if we go back
4:38 to the balance sheet,
4:41 then we can check the total amount in
4:44 our unallocated earnings and see that it
4:47 says zero because we've allocated all of
4:51 them. We can even go to the first day of
4:54 the next fiscal year
4:57 and we'll see that both the unallocated
5:00 earnings for the current year and the
5:02 retained earnings for the current year
5:04 have both returned to zero. so that we
5:06 can start with a fresh slate for this
5:08 new year. And last year's profits are
5:10 visible in the previous year's retained
5:13 earnings account right there, ready to
5:18 Now, we'll use the annual closing
5:20 feature to complete the fiscal year end
5:22 process. Here in our accounting
5:25 dashboard, we have a dedicated journal
5:28 for our tax returns where we'll find our
5:30 annual closing tax report. When we click
5:33 on the tax returns button, this view
5:36 displays a chronological list of all
5:38 pending returns. By default, we only see
5:42 those that need to be completed.
5:45 The line related to our annual closing
5:48 includes the year 2025,
5:50 the deadline date,
5:53 and the related branch if this was a multi-comp.
5:56 multi-comp.
5:59 and an action step status summary with
6:02 our two steps review and submit. And if
6:05 I hover on the right of the line, an
6:08 activities button appears here if we
6:11 want to schedule an activity to help us
6:17 The pending message here is related to
6:20 the validation checks that ODU performs
6:22 to make sure everything is in order
6:24 before submitting the annual closing.
6:27 These checks cover allocating earnings
6:29 as well as all the best practices that
6:31 we shared earlier in this video. Some of
6:33 these checks are performed automatically
6:35 like these two here, while others serve
6:38 as reminders to review essential tasks
6:40 such as the earnings allocation.
6:43 If an automatic check detects an issue,
6:46 it will be labeled as an anomaly. Let's
6:48 start with the bank reconciliation and
6:50 we'll click on it. And we can see that
6:52 these bank transactions were not reconciled.
6:54 reconciled.
6:56 Okay, got it. It looks like the
6:58 customer's payment communication wasn't
7:00 complete. So, let's correct it right
7:01 away by just setting the correct
7:04 partner, which was Leaf and Stone
7:06 Gardens. And we'll do that on both of
7:09 these transactions.
7:13 And when we did that, ODU automatically
7:14 reconciled them with the correct
7:17 invoices. So, they are good to go. We'll
7:20 use the breadcrumbs to go back to our
7:22 tax return.
7:24 And we can see that the check has been
7:27 automatically set to reviewed.
7:30 For the earnings allocation check, I'll
7:33 click on the line. And since we took the
7:35 previous year's unallocated earnings and
7:37 moved them to our undistributed profits
7:40 account, I'll just go ahead and go back
7:44 and set this to supervised.
7:46 These checks here are automatically run
7:48 by ODO, but it's also possible to add
7:50 your own checks. You simply need to
7:53 enable the developer mode and then open
7:55 the checks section under the
7:57 configuration menu.
7:59 Once all the checks are reviewed or
8:01 supervised, the annual closing can be
8:03 submitted. We'll go ahead and validate
8:06 it. And if I click on the additional
8:09 options menu here, it's always possible
8:11 to reset it to go back to our initial
8:14 stage if needed. In our case, we'll
8:17 click submit and we'll follow the
8:18 submission instructions that are related
8:25 and we can go ahead and mark it as submitted.
8:31 Finally, we want to look at our lock
8:33 dates. These can prevent any
8:35 modifications or new records that would
8:37 mess with the fiscal year calculation.
8:40 If we go to the accounting menu, we can
8:43 find lock dates. And this menu item is
8:45 only available to users with
8:46 administrator access rights for the
8:49 accounting app. And only they can add,
8:52 remove, or modify the lock dates. We
8:54 have five different lock date types
8:56 here, and they're listed so that we can
8:58 set them in order starting at the top
9:00 and moving toward the bottom. The sales
9:02 journal lock date prevents the creation
9:04 of new invoices when closing the period.
9:07 This way, any invoices posted after this
9:09 date will have an accounting date in the
9:12 next period. The purchase journal lock
9:14 date works like the sales journal lock
9:17 date, but for vendor bills. Next, the
9:20 lock tax return date ensures no journal
9:22 entries affect tax accounts before that
9:25 date. And this was automatically set
9:27 when we validated and locked our monthly
9:30 tax return. Finally, the lock everything
9:32 date prevents any journal entries from
9:34 being posted before this date, shifting
9:36 their accounting date to after the lock
9:38 date instead.
9:40 Note that these lock dates that we've
9:42 explored so far are all reversible as
9:44 users with the accounting administrator
9:46 access rights can still change this date
9:49 after it's been set. So let's say that
9:53 we remove the lock everything date. ODU
9:55 will allow us to indicate that we want
9:57 to make an exception and this exception
10:01 can be applied only to me or to everyone
10:03 and we have options for how long it
10:07 should last. We can also log a reason
10:09 for this exception.
10:11 And all of this information is
10:14 timestamped and logged in the chatter of
10:16 the company record. For now, I'll give
10:19 myself an exception so that I can finish
10:24 closing the fiscal year uninterrupted.
10:27 Be careful though because the hard lock
10:30 date here is irreversible to ensure
10:33 inalterability and to meet accounting
10:35 requirements in some countries. If it's
10:37 not required in yours, you can skip it.
10:40 But if it is, only set it when you're
10:42 absolutely sure it's the correct date
10:44 because you will not be able to make an
10:45 exception regardless of your access
10:48 rights. That's all for this video, but
10:50 be sure to check out our online
10:52 documentation on this topic for more
10:55 information on closing the fiscal year.
10:57 This has been your Pal. I'll see you in
