Best Practise - Transfer to GL on Daily or Periodic Basis
By Jag - September 05, 2012
a) Is it good to run create accounting in final mode on daily basis and transfer Journal entries to GL? .Will there be any specific advantage or disadvantage by doing this.
At the outset, the ‘frequency’ in which accounting entries are generated and transferred to General Ledger is primarily dependent upon (i) Volume of transactions (ii) Accuracy and Integrity of the transactions being performed by end users and organizational policies.
To elaborate, in a case where transaction volumes are very high (say a million records or > per month) it is always good to generate entries, verify and then transfer these to General Ledger for Posting so that transactions are efficiently managed in smaller batches. This will certainly minimize the time for accounting the transactions at period ends as the stress factor will be reduced considerably both in terms of Enterprise Application performance, time for completing scheduled runs and verification.
At the same time, accounting transactions in smaller batches / frequencies will also require significant levels of data accuracy and integrity to be maintained – Otherwise, there will be frequent needs to reverse / cancel the transactions and account these afresh. Considering, live environment in Organizations where one specific user is unlikely to have complete control over the chain of events in a transactions, in the world of ‘Enterprise Applications’ , it is always good to account the transactions in a specific order [E.g. Account Payable Invoice preferably after processing / accounting PO Receipts/Corrections/Returns ] and at specific ‘frequencies’ which are reasonable. Purely from this perspective, it may be too cumbersome to account transactions daily as this might involve too much of coordination among multiple users on a daily basis which may not be feasible.
Advantage of accounting (including posting of transactions) on a daily basis is - The Sub and General Ledger Balances will always be updated to the latest available date.
However, accounting / posting of transactions on a daily basis may be slightly inflexible in as much as the transactions may not be able to corrected (which are already accounted, if necessary) or may result in reversals / re accounting to address any errors noticed.
In short, it may not be a very sound practice (at least till full transactional data integrity is validated) to ‘Final’ Account transactions that too on a Daily basis. It is good to verify the transactions first for completeness and correctness before accounting. Needless to mention, such ‘Verification’ will require to identify the ‘Transaction Reports’ available within Enterprise Applications using which transactions can be validated quickly and reliably. Many organizations nowadays mandate ‘Monthly Closing’ & Reporting within 4 – 5 days of any month end. Such requirements also need to be considered while finalizing frequency of accounting / posting.
b) Is it good to run create accounting on a weekly or Bi-weekly basis and transfer journal entries to GL ?
Again assuming some amount of ‘data inconsistency’ exists in the Organization, it will be a good idea to first start with a ‘bi weekly’ accounting / transfer and gradually move towards ‘weekly’ routines. May be good to stay @ ‘weekly’ routine unless data volumes are too high or 100% data consistency is assured. Even then, based on ‘Activity Cost Vs Benefit’ principles, it may be good to evaluate time / cost involved by the Users to do these processes daily Vs time / cost involved on a weekly basis and ensure that incremental time / cost just to carry out these activities on a shorter frequency is justified.
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