Open period accounting

We love businesses that use sage. We find they are efficient which makes us more efficient, so we can reduce your accountancy fees by up to 50%. Click here to start talking to us.

What is Open Period accounting about?

Open period accounting is simple, no accounting period is closed off during the year, the accounting period is defined by the date of the transaction. It is much more simple to use than traditional methods but it does have a weakness. Fortunately it's weakness is easily controlled and in most cases is never a problem.

Put simply if you back date a transaction into a period for which you have already presented management accounts then those accounts will be invalid as they will be missing your back dated transaction.

There are two options either reprint your original accounts and resubmit them with an explanation of the reason for the change or, move the transaction into the current accounting period so it will be reported on later. You need to use your judgement as to whether or not the original accounts are now misrepresentative to decide on which course to follow.

There are two ways to move a transaction from a previous period into the current period, the easiest is to simply change the date of the transaction using posting error corrections, however, this may also alter the date in the Sales/Purchase ledger and so delay payment and or confuse the supplier/customer. The alternative is to reverse the transaction on the original date and then repost the transaction with a current period date and match off the reversal and current date transactions in the supplier/customer ledger.

But to fix these errors you need to find them, fortunately there is a simple method to find back dated transactions after the point at which you produced your management accounts. To do this you need to know the point at which you printed the management accounts. Every transaction is Sage is given a unique number, you can see the numbers at the left hand side of account activities and in the audit trail. The current transaction number is also shown in the bottom right of the screen on the status bar. when you run your accounts just make a note of the transaction number.

To find back dated transactions run an audit trail report for transactions from that number plus 1 to 9999999 and for a date range from 010180 to the final date of the last accounting period. This will then list transactions dated prior to the current period entered after the management accounts were printed.

In practice most people elect to enter late invoices into the following period at the time of entry and avoid this issue. n.b. you still need to check as we are all human and errors can be made.