Year-End Procedures for Business Management Systems

It’s Time to Tidy Up Operations and Get Ready for the New Year

By Nick Faiola, R&D Business Systems

Although this article is focused on your service department, very similar procedures apply to the sales side of your business as well.

Year-end procedures encompass potentially two different groups of projects.  There is calendar year-end and there is also fiscal year-end.  If your financial year-end is Dec. 31, then you will be combining calendar year-end functions with fiscal year-end routines, but they really should be thought of independently.

Calendar year-end typically includes a series of maintenance procedures, some of which will also be necessary for the fiscal year-end.

If you are using a fully integrated business management system (BMS), then this should include barcode scanning technology so you can do your physical count of your inventory through the scanners. This will also mean the reconciliation part of the task will be very quick and simple.  It is just not practical today to shut down any department for any significant amount of time as we are all too busy, so each truck will need to be scheduled to come in for a count.  A practical way of scanning a truck is to unload all the inventory and scan it as you place it back in.  This both helps re-organize the vehicle and assures that every part was scanned.

Once your physical is completed you will need to run Parts & Appliance (Serialized) Valuation reports on both sides of your business, so these totals can be reconciled to the general ledger (GL).  It is critical that your inventory and GL are in balance.  Small variances may be acceptable, but anything substantial must be investigated. If you discover an out-of-balance, you will need to dig into this as this may mean you have a problem in how you are processing paperwork, specifically the various credits we all receive.  Warranty credits vs. good parts returns vs. damage allowances or other concessions all need to be processed through your inventory, purchasing and accounts payable to the correct GL accounts or you may be misapplying the funds and cause an out-of-balance.

Here are the remaining year-end BMS procedures that you should follow:

Year-End Roll: These procedures are an important task to remember, and they need to be done at a calendar year-end.  These will maintain year-to-date and previous year-to-date totals in numerous areas of your BMS.  This will entail a year-end roll in parts inventory, serialized inventory for appliances, accounts receivable for customers, and accounts payable for the suppliers.  

There are several steps that should also be done on a semi-regular basis to stay on top of minimum/maximum levels, what your best-sellers are, what products year-end are bringing in the most profit, etc.  Your BMS should track your monthly sales and yearly sales, not just for the current year but also past years, and separate warranty from COD parts usage.  Stocking COD high-turnover parts will be profitable for you, although stocking warranty parts not only ties up money but has no profit, and warranty parts go in and out of favor as the new models are released.

Written business and volume on each service truck is critical to help you re-evaluate what should be stocked on each vehicle.  You only want to stock the truly fast-moving parts, and since most technicians work in geographic areas, brands that are popular in one neighborhood may not be the same in the next region, so you need to analyze the minimum/maximum per vehicle independently.

Scheduling:  This may be a good time to re-evaluate both the delivery and service routes and revise the calendars for next year if needed.

Open Service Calls: Your system should identify any service tickets that have been open for any extended period.  Although this is not really a year-end procedure, this is a good time to remember to look at any older jobs and reach out to the customer.  This is where you should have pre-written emails and text messages set up so you can easily send your customers notifications.

Old Backorders: Like open service tickets, your system also needs to identify any parts that have been on order for an excessive period so you can make sure the supplier has not canceled the order and that the customer knows you have not forgotten them.  This too is where you should have standardized emails and text messages set up so you can easily send your customers notifications.

These are just a few of the common year-end procedures from the inventory, POS, purchasing, and dispatching side of the business that your BMS should address for you. But there is also the accounting side of your business, and this too is critical. Accounting will also start getting into the fiscal year-end side of this discussion which we can address in a future column.

Nick Faiola is president of R&D Business Systems, makers of ePASS Enterprise Software. The British Columbia-based business has been developing sales and service software for the appliance, electronics, and furniture industries for over 35 years. For more information, call (604) 439-1115.