Financial Statement

This guide explains how to prepare your year-end financial statements in ERPNext and what deliverables you should export for your accountant.

It is written for companies that use ERPNext for daily accounting and want to hand over a clean, complete package to their accountant or tax advisor at the end of the financial year.

Important: This guide does not replace accounting or tax advice. Always clarify your specific requirements with your accountant, especially regarding fiscal year dates, accruals, depreciation, taxes, shareholder accounts, VAT, and local filing requirements.

Goal

At the end of this process, you should have:

• complete accounting transactions for the year
• reconciled bank accounts
• checked customer and supplier balances
• reviewed VAT/tax accounts
• booked necessary year-end adjustments
• exported the key ERPNext reports
• prepared a clean package for your accountant

1 - Create or check the fiscal year

At the beginning of the year, you have to create a fiscal year in ERPNext.

Usually, the fiscal year runs from:

01.01.XXXX to 31.12.XXXX

However, this may differ depending on your company setup. Please clarify the correct fiscal year with your accountant.

2 - Enter invoices, payments, journal entries

Before preparing the year-end closing, all business transactions for the year must be entered in ERPNext.

The following DocTypes should contain all relevant transactions that happened throughout the year:

• Sales Invoices
• Purchase Invoices
• Payment Entries
• Expense Claims
• Journal Entries

ERPNext DocTypes

Sales Invoice
Purchase Invoice
Payment Entry
Expense Claim
Journal Entry

Todo

All customer invoices are created and submitted

• All supplier invoices are created and submitted
• All payments from customers are booked
• All payments to suppliers are booked
• All expense claims are entered
• All salary, tax, insurance, interest and correction bookings are entered
• No important transactions are still in Draft status
• Cancelled or incorrect documents have been reviewed

3 - Check your bank balance

Your bank statement should perfectly match your bank account in ERPNext.

You need to perform this check for every bank account, credit card account or payment provider account used by the company.

Examples:

• main CHF bank account
• EUR or USD bank account
• credit card account
• PayPal
• Stripe
• TWINT
• other payment providers

ERPNext path

Accounting > Bank Reconciliation

or, depending on your setup:

Accounting > Bank Statement Import

Also, it can be done using the general ledger and selecting the correct account.

Expected result

The bank balance in ERPNext should match the official bank statement as of the last day of the fiscal year.

4 - Check customer receivables

You need to check whether the open customer invoices in ERPNext are correct.

ERPNext path

Accounting > Accounts Receivable

Use the reporting date:

31.12.XXXX

Todo

• Check all open customer invoices
• Confirm that the open balance is correct
• Check if old invoices are still collectible
• Identify bad debts
• Write off invoices if needed, after approval from your accountant
• Check customer advances or overpayments
• Check if credit notes are missing

Deliverable for accountant

Export:

Accounts Receivable Report as of 31.12.XXXX

5 - Check supplier payables

You need to check whether the open supplier invoices in ERPNext are correct.

ERPNext path

Accounting > Accounts Payable

Use the reporting date:

31.12.XXXX

Todo

• Check all open supplier invoices
• Confirm that the open balance is correct
• Check if invoices received after year-end belong to the old year
• Check unpaid insurance, tax, rent, software or service invoices
• Check supplier advances or overpayments
• Book missing supplier invoices
• Book accruals for expenses that belong to the old year

Deliverable for accountant

Export:

Accounts Payable Report as of 31.12.XXXX

6 - Check VAT / tax accounts

If your company is VAT registered, VAT accounts should be checked before closing the year.

The VAT reports submitted during the year should match the accounting data in ERPNext.

ERPNext reports and areas to check

General Ledger
Sales Register
Purchase Register
Tax Accounts
Chart of Accounts

Todo

• Compare turnover in ERPNext with submitted VAT reports
• Check output VAT accounts
• Check input VAT accounts
• Check VAT payable or receivable as of 31.12.
• Check that all VAT postings use the correct tax template
• Check if any transactions were posted without VAT by mistake
• Book VAT differences if required
• Save copies of submitted VAT statements

Deliverable for accountant

Export or provide:

VAT statements for the full year
Sales Register
Purchase Register
General Ledger for VAT accounts

7 - Book depreciation

If your company owns fixed assets, depreciation must be booked.

Examples of fixed assets:

• computers
• servers
• machines
• vehicles
• furniture
• tools
• hardware
• office equipment

ERPNext path, if using the Asset module

Assets > Asset Depreciation

or:

Assets > Process Depreciation

If you do not use the Asset module, depreciation can be booked manually with a Journal Entry.

Example journal entry

Depreciation Expense        Debit
Fixed Asset Account         Credit

or with accumulated depreciation:

Depreciation Expense        Debit
Accumulated Depreciation    Credit

Todo

• Check the fixed asset list
• Check asset purchases during the year
• Check asset disposals during the year
• Book depreciation
• Compare asset balances with the balance sheet
• Export the asset register

Deliverable for accountant

Export:

Fixed Asset Register
Depreciation Report
General Ledger for fixed asset accounts

8 - Check shareholder, owner or related-party accounts

For corporations, shareholder accounts are important and should be reviewed carefully.

Examples:

• shareholder loan
• current account shareholder
• private expenses paid by the company
• expenses paid privately for the company
• dividends
• salary payments
• expense reimbursements

ERPNext path

Accounting > General Ledger

Filter for the relevant accounts.

Todo

• Check shareholder loan balances
• Check owner current accounts
• Check private expenses
• Check reimbursements
• Check dividends
• Check salary payments
• Check whether interest must be booked
• Clarify unclear balances with the accountant

Deliverable for accountant

Export:

General Ledger for all shareholder / owner / related-party accounts

9 - Check salary and social insurance accounts

If salaries are paid through ERPNext or booked manually, salary accounts should be reconciled.

Todo

• Check gross salaries
• Check net salary payments
• Check social insurance liabilities
• Check pension fund liabilities
• Check withholding tax, if applicable
• Check accident insurance
• Check daily sickness insurance
• Check salary certificates
• Check unpaid salary amounts as of 31.12.

Deliverable for accountant

Provide:

Salary summary
Social insurance statements
Pension fund statements
Salary certificates
General Ledger for salary accounts

10 - Review the Trial Balance

The Trial Balance gives an overview of all account balances.

ERPNext path

Accounting > Trial Balance

Use:

From Date: 01.01.XXXX

To Date: 31.12.XXXX

Todo

• Check that debit and credit totals match
• Check unexpected balances
• Check suspense accounts
• Check rounding accounts
• Check old balances that should no longer exist
• Check accounts with negative balances
• Check accounts that were used incorrectly

Deliverable for accountant

Export:

Trial Balance as of 31.12.XXXX

11 - Review the Profit and Loss Statement

The Profit and Loss Statement shows the company’s income and expenses for the year.

ERPNext path

Accounting > Profit and Loss Statement

Use:

From Date: 01.01.XXXX
To Date: 31.12.XXXX

Todo

• Check revenue
• Check cost of goods sold
• Check salary expenses
• Check rent
• Check travel and entertainment expenses
• Check vehicle expenses
• Check insurance expenses
• Check depreciation
• Check tax expense
• Check extraordinary income or expenses
• Check whether the profit or loss is plausible

Deliverable for accountant

Export:

Profit and Loss Statement 01.01.XXXX - 31.12.XXXX

12 - Review the Balance Sheet

The Balance Sheet shows the company’s assets, liabilities and equity as of year-end.

ERPNext path

Accounting > Balance Sheet

Use:

Date: 31.12.XXXX

Todo

• Check bank balances
• Check receivables
• Check payables
• Check VAT balances
• Check tax balances
• Check fixed assets
• Check inventory, if applicable
• Check loans
• Check shareholder accounts
• Check share capital
• Check retained earnings
• Check current year profit or loss

Deliverable for accountant

Export:

Balance Sheet as of 31.12.XXXX

13 - Export the General Ledger

The General Ledger is one of the most important exports for your accountant.

It shows all postings per account.

ERPNext path

Accounting > General Ledger

Use:

From Date: 01.01.XXXX
To Date: 31.12.XXXX
Company: Your company

Recommended export

Export the full General Ledger for the whole fiscal year.

Also export separate ledgers for important accounts if requested by your accountant.

Deliverable for accountant

Export:

Full General Ledger 01.01.XXXX - 31.12.XXXX

14 - Create the Period Closing Voucher

Only create the Period Closing Voucher after all checks and year-end bookings are complete.

The Period Closing Voucher closes income and expense accounts and transfers the result to the selected closing account.

ERPNext path

Accounting > Opening and Closing > Period Closing Voucher

Typical fields

Company: Your company
Posting Date: 31.12.XXXX
Fiscal Year: XXXX
Closing Account Head: Retained Earnings / Profit Carried Forward
Remarks: Year-end closing XXXX

The closing account head is usually the account "2970 - Gewinnvortrag oder Verlustvortrag" in the default ERPNext Chart of Accounts.

Important

Do not create the Period Closing Voucher too early.

Create it only after:

• all invoices are entered
• all payments are booked
• all bank accounts are reconciled
• VAT is checked
• accruals are booked
• depreciation is booked
• tax provision is booked
• your accountant has reviewed the reports, if applicable

Todo

• Confirm with accountant before submitting
• Create Period Closing Voucher
• Check the new year Profit and Loss Statement starts from zero
• Check that Balance Sheet balances are carried forward correctly

15 - Prepare the accountant package

At the end, prepare a folder for your accountant.

Recommended folder name:

Year-End Closing XXXX - Company Name

Recommended folder structure

01 Financial Reports
02 General Ledger
03 Bank Statements
04 Accounts Receivable
05 Accounts Payable
06 VAT
07 Payroll
08 Fixed Assets
09 Accruals and Deferrals
10 Tax
11 Shareholder and Related Parties
12 Other Documents

16 - Deliverables for the accountant

The following documents should usually be provided to the accountant.

Financial reports

• Balance Sheet as of 31.12.XXXX
• Profit and Loss Statement 01.01.XXXX - 31.12.XXXX
• Trial Balance as of 31.12.XXXX
• Full General Ledger 01.01.XXXX - 31.12.XXXX

Bank and payment accounts

• Bank statements for all bank accounts
• Bank statement as of 31.12.XXXX
• Credit card statements
• PayPal / Stripe / TWINT statements, if applicable
• Bank reconciliation overview, if available

Customers

• Accounts Receivable Report as of 31.12.XXXX
• List of doubtful or bad debts
• Customer advances or overpayments
• Important customer contracts, if relevant

Suppliers

• Accounts Payable Report as of 31.12.XXXX
• Supplier statements, if available
• Invoices received after year-end that belong to the old year
• Supplier advances or overpayments

VAT / taxes

• VAT statements for the full year
• VAT account ledger
• Sales Register
• Purchase Register
• Tax provision calculation, if available
• Tax invoices or tax assessments from previous years

Payroll

• Salary summary
• Salary certificates
• Social insurance statements
• Pension fund statements
• Accident insurance statements
• Withholding tax statements, if applicable

Fixed assets

• Fixed Asset Register
• Depreciation Report
• Documents for asset purchases
• Documents for asset sales or disposals

Accruals and deferrals

• List of accrued expenses
• List of prepaid expenses
• List of accrued income
• Supporting documents for each item

Shareholder and related-party accounts

• General Ledger for shareholder accounts
• Loan agreements, if applicable
• Interest calculations, if applicable
• Dividend documentation, if applicable
• Expense reimbursement documentation

Other documents

• Inventory list, if applicable
• Loan statements
• Leasing agreements
• Insurance policies
• Important legal contracts
• Previous year financial statements
• Previous year tax assessment

17 - Final checklist

Before sending everything to your accountant, check the following:

[ ] Fiscal year is correct
[ ] All sales invoices are submitted
[ ] All purchase invoices are submitted
[ ] All payments are booked
[ ] All expense claims are booked
[ ] All journal entries are booked
[ ] Bank balances match bank statements
[ ] Customer receivables are reviewed
[ ] Supplier payables are reviewed
[ ] VAT accounts are checked
[ ] Salary accounts are checked
[ ] Fixed assets are checked
[ ] Depreciation is booked
[ ] Prepaid expenses are booked
[ ] Shareholder accounts are reviewed
[ ] Trial Balance is exported
[ ] Profit and Loss Statement is exported
[ ] Balance Sheet is exported
[ ] General Ledger is exported
[ ] Accountant package is complete
[ ] Period Closing Voucher is created only after final review

18 - Recommended workflow

The recommended workflow is:

1. Complete all accounting transactions
2. Reconcile all bank accounts
3. Review receivables and payables
4. Review VAT and tax accounts
5. Book depreciation
6. Book accruals and deferrals
7. Book tax provision
8. Review shareholder and payroll accounts
9. Export Trial Balance, P&L, Balance Sheet and General Ledger
10. Send deliverables to accountant
11. Accountant reviews and proposes corrections
12. Book final correction entries
13. Create Period Closing Voucher
14. Archive final financial statements