Year-end close in Odoo is simpler than in many traditional accounting systems because Odoo doesn't require you to manually create closing journal entries for P&L accounts. The system handles retained earnings automatically. But there are still important steps to get right.
Set up your fiscal year
- Go to Accounting → Configuration → Settings.
- Under Fiscal Periods, set your Last day of the fiscal year.
- For most Australian businesses, the fiscal year ends on 30 June. Set the closing date to 30/06.
- Odoo uses this to determine which transactions belong to which financial year in reports.
- If your business uses a different fiscal year (some businesses use calendar year or other periods), set the appropriate end date.
How Odoo handles year-end automatically
Unlike traditional accounting software, Odoo doesn't require a formal "closing" process that generates closing and opening journal entries. Instead:
- P&L accounts (revenue and expense) — Odoo automatically calculates the net result and shows it as "Undistributed Profits/Losses" on the balance sheet. No closing entries needed.
- Balance sheet accounts (assets, liabilities, equity) — Balances carry forward automatically. There's no separate "opening balance" entry for the new year.
- When you generate a Balance Sheet report for the new fiscal year, Odoo calculates the retained earnings from prior years' P&L and includes it in equity.
Odoo's approach is elegant: you never need to "close" a year in the traditional sense. The system is always ready to show you any period's financials. However, you should still follow a year-end checklist to ensure accuracy.
Year-end checklist
1. Complete all transactions
- Ensure all invoices for the financial year have been issued and recorded.
- Record all vendor bills received for goods/services in the closing period.
- Process all bank statement reconciliations through to year-end.
- Record any accruals or prepayments that span the year-end boundary.
2. Review and adjust
- Depreciation — Run depreciation entries for all fixed assets through to year-end.
- Inventory valuation — Reconcile your inventory valuation report with the stock account on your balance sheet.
- Provisions — Record any provisions for bad debts, warranties, or other contingent liabilities.
- Accruals — Record accrued expenses (incurred but not yet billed) and accrued revenue (earned but not yet invoiced).
- Prepayments — Adjust prepaid expenses to recognise the correct amount for the period.
3. Reconcile key accounts
- Reconcile bank accounts — bank balance in Odoo should match your bank statement.
- Reconcile accounts receivable — aged receivables report should match the AR account balance.
- Reconcile accounts payable — aged payables report should match the AP account balance.
- Reconcile tax accounts — GST collected and GST paid accounts should match your BAS lodgements.
- Reconcile payroll accounts — PAYG withholding, super payable, and net wages should tie out.
4. Generate tax reports
- Generate the final BAS for the financial year (April–June quarter or June month, depending on your reporting period).
- Review the Tax Report under Accounting → Reporting → Tax Report.
- Ensure all GST has been correctly categorised and reported.
- Lodge the BAS with the ATO.
5. Set lock dates
- Go to Accounting → Accounting → Lock Dates.
- Lock Date for Non-Advisers — Prevents regular users from modifying entries before this date. Set this as you close each month or quarter.
- Lock Date for All Users — Prevents everyone (including accountants) from modifying entries. Set this once your accountant has finalised the year.
- Tax Lock Date — Prevents changes that would affect tax reports for closed periods. Set this after lodging your BAS.
- Lock dates are your protection against accidental changes to finalised periods.
Set lock dates progressively throughout the year, not just at year-end. Lock each month after reconciliation is complete. This prevents backdated entries from disrupting already-reconciled periods.
6. Distribute retained earnings (optional)
- By default, Odoo shows the P&L result as "Undistributed Profits" in equity on the balance sheet.
- If you want to formally move this to a "Retained Earnings" account, create a journal entry: debit "Undistributed Profits" and credit "Retained Earnings."
- This is optional — many businesses leave profits undistributed and it has no impact on reports.
- Your accountant can advise whether a formal distribution entry is needed for your business.
Provide information to your accountant
- Export the Trial Balance as at 30 June.
- Export the Profit and Loss statement for the financial year.
- Export the Balance Sheet as at 30 June.
- Provide aged receivables and payables reports.
- Provide bank reconciliation statements showing the reconciled position at year-end.
- All reports can be exported to PDF or Excel from Odoo's reporting module.
Year-end in Odoo is straightforward if you've been maintaining clean books throughout the year. If you need help with your year-end close or setting up lock dates, get in touch.