Month End Close Process with Business Central: Cash Management
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Mastering the Month End Close Process with Business Central: Cash Management and Multicurrency Management

As with other ERP solutions, the month end close process in Microsoft Dynamics 365 Business Central is unique. This series leverages what is unique to Business Central in order to help you draft your own period-end checklists.

This series covers the following areas:

Cash Management

Bank Reconciliation Fees and Adjustments

While the bank account is typically reconciled throughout the month, when it comes to the month-end close process, there are special adjustments and fees that are often posted to the last day of the previous month. With these transactions, you can enter them directly on your bank reconciliation in the ‘adjustment lines’ worksheet area of the bank reconciliation.

This will be different depending on whether you’re using the “Traditional” bank reconciliation or the “Auto-match” bank reconciliation.

Traditional Bank Reconciliation

Once you create a new Bank Reconciliation and set your statement date and balance on the header, you can run the Suggest Lines… function, you can begin to clear the cheques, deposits, and other ledger entries. Any residual adjustments that need to be entered can be done on this page as well.

  • Scroll to the bottom of your bank rec. and go to the Adjustments tab;
  • Enter the Posting Date (typically the statement date) of the line item;
  • Select the relevant G/L account (e.g. “Bank Fees”, “Interest Expense”, etc.);
  • Select the current bank account as the balancing bank account;
  • These will post when you post your bank rec.

Auto-match Bank Reconciliation

Once you create a new Bank Reconciliation and import your bank statement file into the system, you can match them manually or automatically and then select the differences (the manual adjustments that you will be creating):

Once they’re selected, you then click into the ribbon and select Transfer to General Journal… in the ribbon:

Select the journal batch you’d like to transfer them to and click OK:

This then populates your Gen. Journal Batch with the differences, where you can then select the relevant G/L Accounts and then post:

After posting, those entries will then appear in the Bank Rec. to be matched and reconciled:

Multicurrency Management

Some clients will allow their customers and vendors to invoice / be invoiced in foreign currencies and, therefore, require tracking and posting of realized and unrealized gains and losses on foreign currency exchange. Other clients may also utilize the Additional Reporting Currency functionality in the system to display their G/L balances and transactions in a secondary currency.

This multicurrency management functionality inherently exists in Business Central and there are month-end considerations around this set up.

Updating Exchange Rates

Business Central can be hooked up to a Currency Rate Service to automatically pull in exchange rates from an online F/X feed so you don’t have to worry about manually maintaining rates. However, if you’re not using a Currency Rate Service, you can manually update the exchange rates for your currencies:

  • Go to Currencies by either using the search function or exploring to Finance, Cash Management, Setup;
  • Select the currency you would like to adjust and click on Exch. Rates in the ribbon;

 

  • Set the exchange rate in the page that opens up and then close/back out of that page;

Exchange Rate Adjustment Batch Job

In addition to configuring the currencies, there is a batch job that you run to calculate and update any realized or unrealized gains or losses – reflected in both the subledger local balances as well as the general ledger for any translation gains or losses. This will run through the Customer, Vendor, and Bank subledgers.
Additionally there is functionality to compute and post the Additional Reporting Currency translation gain/loss (adjustment), which is optional when running this routine.

To run this batch job:

  • Go to the Currencies list page;
    Click on the Adjust Exchange Rate button in the ribbon;
  • Enter the applicable fields and ranges and click OK to run the routine;

Note: The entries produced are summarized and factor in the Dimension combinations of your originating subledger entries. As a natural consequence, if you recently enabled Dimension requirements/validation rules and those prior entries did not have the required Dimensions, you will encounter a Dimension validation error.

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

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