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Understanding inventory period closing
Understanding inventory period closing

Learn about Katana’s inventory period closing period to maintain accurate financials and stock records.

Dayvid Lorbiecke avatar
Written by Dayvid Lorbiecke
Updated this week

Katana uses inventory period closing to make sure that past inventory data remains unchanged, which is crucial for accurate financial reporting and inventory management.

This article explains the significance of closing inventory periods, how it works, and the impact these closures have on different operational aspects like purchasing and sales. It also guides on where to find the closing date in the settings and what actions are restricted during a closed period.

Why inventory periods are closed

Katana closes Inventory periods to avoid changing inventory and its value from older periods. Period closing is standard procedure in accounting to reconcile all of the period's data and prevent further changes from being made.

Katana uses moving average cost, meaning that any past changes trigger a recalculation of all the stock movements after it. Locking past periods helps make sure that data already reported will not get changed and the numbers in Katana and accounting stay the same.

How it works

In Katana, the current and previous months are considered open inventory periods, and everything before the last month is regarded as a closed inventory period. Once a period is closed, you can't update, create or delete documents that affect inventory quantities or their calculated average cost for that period.

Open and closed inventory periods

The open inventory period is the current month and the previous month. Closed inventory period refers to everything at and before the inventory closing date.

Inventory closing date

The inventory period closing date is always the last day of the month and is updated when a month ends. When the inventory period closes, a whole month will become closed for changes when the next month begins.

Example: If today is May 15th, the Open period is May and April, and the inventory closing date is March 31st. On June 1st, the inventory closing date will then update, and so on.

Where to find the inventory closing date

Head to Settings screen > Costing to find the current inventory closing date.

Costing section of the settings screen

What is affected by the inventory period closing

Inventory period closing means that any actions that could create changes to inventory from the closed period are locked.

Documents in the closed period will display a status of Inventory period closed in the top right corner.

Shows a document that is in a closed inventory period

What is locked in a closed inventory period

Purchasing - Purchase orders with a Received date within a closed inventory period. These order can't be changed back to a Not Received status, the received date can't be changed, and the additional costs can't be added. Also, closed period dates can't be chosen when receiving items.

Sales - Sales orders with a Picked date in a closed inventory period. These orders can't be changed back to a Not Shipped status, and the picked date can't be changed. Also, closed period dates can't be chosen for picked dates.

Manufacturing - Manufacturing orders with a Done date in a closed inventory period. Also, a MO with a done date in an open inventory period can't be changed to a date in a closed inventory period.

Production of a Partially complete MO with a Completed date in a closed inventory period. The Completed date of production in an open inventory period can’t be changed to a date in a closed inventory period.

Stock adjustments - Stock adjustment with an adjustment date in the closed inventory period. Also, a closed inventory period date can't be chosen for an open period stock adjustment.

Stock transfers - Stock transfers with a transfer date in a closed inventory. Also, a closed inventory period date cannot be chosen for an open period stock transfer.

Manually changing the inventory closing date

A manually changed inventory closing date will only stay in effect until the next automatic monthly closing cycle. If the closing date is manually moved forward from the default date, the automatic closing cycle will not reopen this closed period.

NOTE: You can only move the date back as far as January 1st, 2022. Changes to transactions before this date would cause inconsistencies and inaccuracies with existing numbers.

Demonstrate caution before making any changes to a previously closed period to avoid unwanted recalculations. Changes made to past documents will trigger recalculations for all associated items. Consider communicating with your accountant before making changes.

TIP: Before changing the inventory closing date, we strongly recommend first communicating with your accountant!

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