My questions related to the year ending procedures adapted by
companies using Manufacturing modules of ERP. The scenario is such
1. The Customer Order De coupling point is Engineer To Order
2. The manufacturing lead time is around 30 -40 days
3. the customer wants to end his year very close to the calender
year. It is group of companies and they want to close all the
companies together
4. Hence at the time of closing of the year there are open
Production Orders in various stages of production.
5. Once these production orders are complete, the books(Journals in
our case) of the closed year need to be reoponed
to update the resultant accounts in General ledger.
Kindly let me know what do manufacturing companies do in the year
end? I can think of asking the customer to first complete all the
Production orders and then close the books. but the customer is not
able to do so. I would like to know what is the standard
manufacturing practice on this.
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Ramaswamy V K - Hi
Almost all the ERPs allow 'Preliminary Close' where transactions can
still be completed in the period but books can be closed to get a
proforma financial reports. This enables the companies to prepare
proforma adjustment journals.
In your scenario, you need to ask the customer following questions.
A. Are the production orders closed in the next period or do they
want the closure to be reflected in the previous period. For
example, if the Production Order raised in December is closed in
January, ideally the closure should be reflected in January and not
in December. However, what happens in many organizations is that the
physical closure happens in December, but the Data Entry in the
system happens in January. In this case, they can enter the
effective date in December and proceed. In this case they will do
the following
1. Preliminary Close the periods and transfer the journals to GL.
Prepare proforma finanicial statements
2. Complete / close transactions in the system effective dated
December.
3. Final close the periods in Subledgers and transfer the journals
to GL. Prepare Proforma TB. Close the Period in GL
4. Pass the adjustment journals in GL in the adjustment period if
any. Else pass these journals in the last period before closing the
books as discussed in step 3.
B. If the production orders are actually closed in the next period
then there is no problem. You can follow the normal process.
Further clarifications will depend on which ERP product you are
using and the exact business scenario. The above detail that I
mentioned relate to Oracle Applications.
Hope this helps.
Regards
Ramaswamy VK
companies using Manufacturing modules of ERP. The scenario is such
1. The Customer Order De coupling point is Engineer To Order
2. The manufacturing lead time is around 30 -40 days
3. the customer wants to end his year very close to the calender
year. It is group of companies and they want to close all the
companies together
4. Hence at the time of closing of the year there are open
Production Orders in various stages of production.
5. Once these production orders are complete, the books(Journals in
our case) of the closed year need to be reoponed
to update the resultant accounts in General ledger.
Kindly let me know what do manufacturing companies do in the year
end? I can think of asking the customer to first complete all the
Production orders and then close the books. but the customer is not
able to do so. I would like to know what is the standard
manufacturing practice on this.
---------------------------------------------------------------------------------------------------------------------------
Ramaswamy V K - Hi
Almost all the ERPs allow 'Preliminary Close' where transactions can
still be completed in the period but books can be closed to get a
proforma financial reports. This enables the companies to prepare
proforma adjustment journals.
In your scenario, you need to ask the customer following questions.
A. Are the production orders closed in the next period or do they
want the closure to be reflected in the previous period. For
example, if the Production Order raised in December is closed in
January, ideally the closure should be reflected in January and not
in December. However, what happens in many organizations is that the
physical closure happens in December, but the Data Entry in the
system happens in January. In this case, they can enter the
effective date in December and proceed. In this case they will do
the following
1. Preliminary Close the periods and transfer the journals to GL.
Prepare proforma finanicial statements
2. Complete / close transactions in the system effective dated
December.
3. Final close the periods in Subledgers and transfer the journals
to GL. Prepare Proforma TB. Close the Period in GL
4. Pass the adjustment journals in GL in the adjustment period if
any. Else pass these journals in the last period before closing the
books as discussed in step 3.
B. If the production orders are actually closed in the next period
then there is no problem. You can follow the normal process.
Further clarifications will depend on which ERP product you are
using and the exact business scenario. The above detail that I
mentioned relate to Oracle Applications.
Hope this helps.
Regards
Ramaswamy VK
1 comment:
Yes, this is true ... same ERP solution for different manufacturing unit process can not be successful procedure. This is a wrong way and the result will be not positive.
The solution for each business process should be customized and industry specific.
Thanks for this good information.
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