general ledger (G/L)

Nothing is more exasperating when doing the month-end close than to find that your Trial Balance (TB) does not reconcile to your subledgers. You have done your Trial Balance on your Microsoft Dynamics 365 Business Central system, and you review your AP or AR subledger summary, only to see a variance. This is something that gives an accountant or controller sleepless nights.  When your general ledger (G/L) and your subledgers get out of alignment. This is usually caused by certain system setups, timing issues, or user processes in the Business Central system itself. Understanding what the root cause is will enable you to fix it.  Here is why your Business Central Trial Balance does not reconcile with your subledgers, and how to fix it.  1. Direct Posting to G/L Control Accounts  What happens most of the time to create a TB/subledger discrepancy? The answer lies in the practice of direct posting to G/L control accounts. In Business Central, control accounts are the G/L accounts that represent your AP, AR, or Inventory subledgers.  These accounts are supposed to be posted only by the system after you have posted an invoice against a vendor/customer/transaction in your inventory. Yet, when the users can post their manual General Journal directly to these G/L control accounts, the balance in the account changes while the balance in the subledger remains the same.  Solution: Check the “Direct Posting” option on your Chart of Accounts for all AP, AR, and Inventory control accounts.  2. Unposted Journals and Approval Workflows  Time-related issues also contribute greatly to difficulties in reconciliation. Unposted General Journals or Sales/Purchase Journals left in the user queue or awaiting their approval can lead to your sub-ledger having transactions that have not yet been recorded in the General Ledger.  For example, when a vendor invoice is entered and released in the Purchase Invoices window, it might not appear on the Trial Balance since it is not posted yet. On the other hand, when you post a General Journal to the General Ledger, but the posting for sub-ledger is wrong, you will find the difference.  Solution: Prior to generating a Trial Balance at the end of the month, make sure to post all batches and there are no pending approval workflows. Make use of User Setup to enforce mandatory closing dates to prevent backdated transactions in the closed period.  3. The Inventory Costing Lag  When your AP/AR ledger matches precisely, but not your Inventory sub-ledger with the GL ledger, then chances are very high that the problem is due to cost postings.  In Business Central, inventory costing occurs on-the-fly. When receiving or delivering inventory, a business system makes use of “Expected Cost,” which goes into an intermediate G/L account. Once you have posted an invoice, Business Central will need to make cost adjustments. If “Adjust Cost – Item Entries” job is not run, and “Automatic Cost Posting” is disabled in your Inventory Setup, then the cost adjustments will get stuck in your sub-ledger and never be posted to your GL ledger.  How to fix this problem? Go to Inventory Setup and set “Automatic Cost Posting” and “Automatic Cost Adjustment” to “Always.” Furthermore, you should schedule Adjust Cost – Item Entries job to run automatically in the Job Queue.  4. Discrepancies with Reconciliation of Bank Accounts  In some cases, the discrepancy might be in Bank Accounts sub-ledger. In such cases, users have reconciled their bank accounts outside the Bank Account Reconciliation module or have posted fees and interest on their bank account straight to G/L without reflecting those transactions on the Bank Account ledger.  Fix: Always post bank fees, interest, and other clearing accounts via the native Bank Account Reconciliation journals of Business Central application. This will ensure that both G/L and bank sub-ledger get updated at the same time.  Conclusion  If your Business Central Trial Balance doesn’t tie out with your subledgers. This usually is not because of a glitch in the software itself but rather a result of the way you manage it. By preventing postings to your control accounts. Posting within specific timeslots and automatically adjusting your inventories, you’ll make sure that your G/L and subledgers always match up.