Closing Periods and Month-End Close

Accounting periods organise the GL by time. At period-end, you close the period to prevent new postings and prepare for financial reporting. This article explains period management and closing.

# What is this page about

This page covers accounting periods in Light: how they are generated, how locking and closing tasks work, the order periods must be closed in, and how to reopen a closed period when you need to. Read it before your first month-end close.

On this page

• Accounting Periods
• Period Status
• Opening Periods
• Posting Date and Period
• Prior Period Postings
• Month-End Close Checklist
• Closing Procedures
• Locking Document Types
• Closing Entries
• Prior Period Adjustments
• Reconciliation and Period Closing
• Reports at Period-End
• Financial Statement Sign-Off
• Period-End Adjustments
• Quarterly and Year-End Closing
• Reopening Old Periods
• Best Practices
• Related Articles

# Accounting Periods

Periods organise the GL by time:

Period types:

• Monthly (most common)
• Quarterly
• Yearly

The period interval is set in your company's accounting period configuration.

Period structure:

• Start date and end date (periods are always month-aligned)
• Status: Open or Closed
• Closing tasks, tracked per company entity (multi-entity companies share the same periods, but each closing task is completed per entity)

# Period Status

Periods have two statuses:

Open: documents can be posted to this period. Most periods are open while you're working in them.

Closed: no new documents can be posted. Used for completed periods, which prevents accidental postings to old months.

Within an open period, you can also lock individual document types (AP, AR, journal entries) by completing the period's closing tasks. See Locking Document Types below.

# Opening Periods

Periods are generated in bulk for an accounting year rather than created one at a time:

1. Go to Accounting → Accounting periods
2. Generate periods by entering a start date and (optionally) an end date
3. Light creates the periods based on your configured interval (monthly, quarterly, or yearly)

Generated periods are created as Open and are ready to accept postings.

Good to know: The date range must be month-aligned (start on the first day of a month and end on the last day of a month) and cannot exceed 12 months. Each new accounting year must start the day after the previous year ends.

# Posting Date and Period

When posting a document, the posting date must fall within an open period:

• Posting date = January 15, 2024
• Light checks = Is the January 2024 period open?
• If open = post allowed, and the transaction posts to the January period
• If closed = the post fails with an error, so re-date the document or reopen the period

The posting date determines which period a transaction belongs to.

# Prior Period Postings

Sometimes you need to post to a prior (closed) period:

1. Go to the period and click Reopen
2. Period status changes to Open, and any later periods are reopened as well
3. Post the transaction
4. Click Close again to re-close

Completed closing tasks are preserved when you reopen, so re-closing is quick. Light records who reopened the period and when.

Important: Closing a period prevents accidental postings, but you can always reopen for adjustments.

# Month-End Close Checklist

A typical month-end close process:

1. Ensure all transactions posted

   • Check bank reconciliation is 100%
   • Verify all invoices posted
   • Confirm all payments processed

2. Create accrual entries

   • Accrue unpaid expenses
   • Accrue unbilled revenue
   • Post manual adjustments

3. Post allocation entries

   • Allocate shared costs
   • Spread period-specific expenses

4. Review GL accounts

   • Check for unusual balances
   • Verify all accounts reconcile

5. Generate reports

   • General Ledger
   • Aged Accounts Receivable and Aged Accounts Payable
   • Cash Flow

6. Review and approve

   • Finance manager or controller reviews
   • Approves period as closed

7. Close period

   • Close period to prevent new postings
   • Archive reports and documentation

# Closing Procedures

To close a period:

1. Ensure all activity is complete

2. Go to Accounting → Accounting periods

3. Complete the period's closing tasks:

   • Lock AP: locks accounts payable documents
   • Lock AR: locks accounts receivable documents
   • Lock JE: locks journal entries
   • FX revaluation: requires the three lock tasks to be completed first

4. Find the period and click Close

5. Light checks that:

   • All closing tasks are completed
   • All previous periods are closed, since periods must be closed in chronological order

6. If the checks pass, the period status changes to Closed, and Light records who closed it and when

Closing tasks can be completed per company entity or for all entities at once. Only company admins and controllers can complete closing tasks and close or reopen periods. Users with the Auditor role have read-only access to view periods and their status.

Once closed, posting to this period requires reopening.

# Locking Document Types

While a period is still open, you can lock individual document types by completing the period's lock tasks:

1. Go to Accounting → Accounting periods
2. Open the period and complete a lock task (Lock AP, Lock AR, or Lock JE)
3. Once a lock task is completed, documents of that type can no longer be posted to the period, even though the period itself is still open

This lets you lock down parts of the ledger progressively during the close. Undoing a lock task removes the lock, and also reopens the FX revaluation task for that period and all later periods, since FX revaluation depends on locked balances.

# Closing Entries

At period-end, create closing entries:

Month-end closing entries:

• Accrual entries (accrue expenses)
• Deferral entries (spread costs)
• Allocation entries (distribute costs)
• Adjustment entries (correct errors)

Year-end closing entries:

• Transfer net income to retained earnings
• Close revenue and expense accounts to zero
• Reset income statement for new year

Closing entries are just regular journal entries, created and posted like any other entry.

# Prior Period Adjustments

If you discover an error in a closed period:

1. Don't reopen and modify (unless required for audit)
2. Instead, create a correcting entry in the current period
3. Entry explains it's a prior period correction
4. GL still shows complete history

This preserves the prior period's record while correcting the error.

Good to know: For major errors, you may need to reopen, correct, and re-close. Document your action for audit.

# Reconciliation and Period Closing

Before closing, reconcile:

1. Bank reconciliation: fully matched
2. AP aging: all invoices matched to payments or marked as outstanding
3. AR aging: all invoices matched to collections or aged appropriately
4. GL accounts: each account reconciled to source documents

Unreconciled items still allow you to close, though it is better practice to resolve them first.

# Reports at Period-End

Generate your period-end reports at Planning & Reports → Reports:

1. General Ledger: detail of all transactions for the period
2. Aged Accounts Receivable and Aged Accounts Payable: outstanding items, with Aged AR Detail and Aged AP Detail for the underlying entries
3. Cash Flow: movement of cash across the period
4. EU Sales List: where you report intra-EU sales

Export any of these to CSV to keep with your close documentation. Together they evidence that the period is complete and accurate.

# Financial Statement Sign-Off

Sign-off is a step you run in your own process rather than a feature inside Light:

1. Your finance manager or controller reviews the period's reports
2. They confirm accuracy and completeness
3. Record their approval in your close file, for example alongside the exported reports
4. Close the period in Light once you have that approval

Light records who closed the period and when, which evidences the close itself. Keep your sign-off record with the rest of your close documentation so the two sit together for an auditor.

# Period-End Adjustments

Common adjustments posted at period-end:

Revenue adjustments:

• Recognise revenue earned but not yet invoiced
• Write off uncollectible accounts

Expense adjustments:

• Accrue unpaid expenses
• Depreciate assets
• Amortise intangible assets

Other adjustments:

• Inventory adjustments
• Currency adjustments
• Valuation adjustments

Create these as journal entries and post them in the period.

# Quarterly and Year-End Closing

For quarters and year-end:

1. Close periods in order: Light requires the preceding period to be closed before you can close the next one, so work forwards through the year. Your company runs either monthly or quarterly periods, so there is no separate quarter to close on top of its months
2. Create special entries: quarterly or annual adjustments
3. Generate comparative reports: compare to prior periods
4. Review trends: analyse changes from prior periods
5. Document assumptions: any estimates or judgments made
6. Get approval: CEO, CFO, or board approval if required

Quarterly and year-end closes are more rigorous than monthly closes.

# Reopening Old Periods

You can reopen any closed period:

1. Go to Accounting → Accounting periods
2. Find the period and click Reopen
3. Period status returns to Open, and all periods after it (along with their accounting years) are reopened as well, keeping the timeline consistent
4. You can now post and modify documents
5. Re-close when done, and completed closing tasks are preserved so re-closing is quick

Light records when periods were reopened and by whom.

# Best Practices

• Close promptly: close soon after month-end rather than letting it drift
• Follow a checklist: use consistent month-end procedures
• Document assumptions: note any judgments made in closing entries
• Review GL: verify the underlying GL data rather than relying on reports alone
• Get approval: have someone review and approve before closing
• Archive reports: keep month-end reports for the audit trail
• Keep audited periods closed: reopen only when strictly necessary
• Train staff: make sure your team understands the closing procedures

# Related Articles

• Understanding Light's general ledger
• Creating manual journal entries
• Year-end closing entries
• Deferred entries (accruals and deferrals)