Mastering the Month End Close Process with Business Central: Accounts Payable

This series covers the following areas:

• The General Ledger
• Accounts Payable (this blog post)
• Accounts Receivable
• Fixed Assets and Inventory
• Cash Management and Multicurrency Management

One of the biggest concerns around accounts payable at month-end is whether expenses have been posted to the correct period per the organization’s policies on expense recognition cut-off.

Given that by default Business Central uses the current date as the “Working Date,” you will need to be aware of this if your policy allows for leeway to post expenses to a previous month.

Many organizations will give a window of a few business days after the end of the month to include expenses that belong in the previous month, particularly if corporate cards are used, which have statements that are released soon after the end of the month.

A typical month-end process, say if today were August 1, 2021, for accounts payable in Business Central might involve:

• Separating invoices and expenses that belong in the previous month (July) for data entry;
• Changing your Work Date in Business Central to the last day of the previous month (i.e. July 31, 2021) by:

Clicking the settings (gear icon) in Business Central;

Selecting My Settings;

Change the Work Date in the pop-up window that appears to the last day of the previous month;

Click OK;

• Proceed to process the accounts payable for the previous month as necessary;
• When done, change your Work Date back to the current date for the other payables;

This batch can then be given to the posting-responsible party to post.

Because bank account reconciliations involve the clearing of payments issued from Business Central compared to bank statements, your bank reconciliation-responsible team member may flag stale-dated cheques, however, that is defined by your organizational policies (typically anywhere between 3-12 months).

To void a cheque and re-issue, you would need to perform:

• A stop payment (if the cheque was lost in the mail/unaccounted for) request to your issuing bank;
• Navigate to Check (or Cheque) Ledger Entries by searching via Tell Me or by exploring Cash Management > Ledger Entries;

• Click on the payment you issue in the list and click on Void Cheque in the ribbon;

• Enter or keep the Void Date the same (defaulted to original posting date), bearing in mind that this is the Posting Date for the reversal on the Bank and A/P control accounts):

• Select Unapply and void cheque (if voiding an applied payment to re-issue) or Void cheque only (if voiding a manual cheque);
• Click Yes;

The entry will show outstanding at the end of the previous month and now be open for you to issue in the current month.

Pro-tip: you can use the filters to pare down the payment list to identify the ones you want to void. In this example below, we’re using 3-months (as of the end of this month) and prior:

Two reports exist in Business Central to help monitor and reconcile your accounts payable to the general ledger:

• The Aged Accounts Payable report – which allows you to see which payables are current, past due, and potentially reaching delinquency;
• The Reconcile AP to GL report – which allows you to see all the purchase receipts that have yet to be invoiced;

This report actually comes in two flavours: an Excel report and a fixed-layout (RDLC) report.

To run the fixed layout report, simply look for Aged Accounts Payable by searching via Tell Me (should be in the Reports and Analysis section) or by exploring Finance > Payables > Reports.

When you open it, you then complete the options on the report as follows:

With this report, you now have information to use for either investigating, following up on, or reversing by credit memo any past due posted payables.  Use the total of this report by vendor posting group (i.e. Domestic, US, etc.) to reconcile the sub-ledger accounts payable balance to the corresponding payable control account in the G/L.

The Excel variant of this report can be found on the Business Manager or Accountant Role Centres. On the front page, you should see the “Excel Reports” icon which drops-down to reveal the Excel reports:

Selecting that downloads the Excel macro-enabled template that you can use to pull the information into Business Central:

This important report shows anything that has been received through POs, however have not been invoiced for. These items will, consequently, not exist in your general ledger, since the invoiced amounts are what hit the G/L. You can use the amounts displayed here to set up an accrual (for example), if necessary.

You an find it by searching “Reconcile AP to GL” via the Tell Me feature.

This report has a variety of filters you can apply to narrow down your results:

Organizations that use Purchase Orders and invoice them outside the PO (i.e. pull receipt lines into a manually-created Purchase Invoice) may find themselves with a list of completed Purchase Orders that need to be purged from the open Purchase Order list. This data hygiene process clears up the clutter that might otherwise never get sorted out.

There is a routine (a processing-only report) that you can run that exactly does this for you. In order to run it, simply search for “Delete Invoiced Purchase Orders” and run the routine.

On the request page for this routine you can opt to filter which POs to run it for or just run it against all open Purchase Orders:

Often times there are Vendors that you no longer want users to select or transact with in the system. This could be because they go out of business/a branch closes, agreements with them lapse, or that you simply don’t foresee ordering from again and want to avoid any mistakes with selecting them from the list. Conversely you may have blocked a Vendor while going through the vetting/onboarding process and now wish to unblock them. Periodic review of Vendors is important and there are a few ‘levels’ of blocking, outlined below:

If this is the case, you can either block them one-by-one by going to the Vendor list and blocking them or en masse using a Configuration Package or the Edit in Excel functionality in Business Central. Below is how you’d use the Edit in Excel capabilities to block them.

• First open up the Vendor list;
• In the ribbon, go to the Page tab and then Edit in Excel;

• Under the Blocked column, set the Blocked field to whatever status is appropriate;
• Publish the changes back to Business Central;

• Note: If you do not have Edit in Excel on your pages, you may be missing the Permission Set that enables you to use that feature.

There may be a number of people that are responsible for or are capable of creating new Vendors in your organization. A natural result of this is that there may be duplicate Vendors created. There are system controls in place that disallow the deletion of records that have ledger entries posted against them. For this specific reason, there is a process you can run to merge two Vendors together.

In order to merge them, simply:

• Open up the Vendor Card of one of the vendor you want to keep;
• Select Merge With… in the ribbon;

• Select the duplicate Vendor No.;
• Review which (if any) fields from the duplicate Vendor you want to override on the Vendor you want to keep;
• Click Merge in the ribbon;

On the same note as the upkeep and maintenance of the Blocked status above, you may also use month-end to review and update Vendor Price lists, Payment Terms, Address information, Banking Information, etc. Using the Edit in Excel functionality is particularly useful for these tasks.

Got questions about Business Central? Contact us directly and one of our ERP experts will get back to you.