At Puzzle, we're all about making accounting easier for founders and bookkeepers. One of the essential tools we've introduced to help with that is the concept of Locked Periods.
So, What Exactly Are Locked Periods?
Imagine you're running your startup, XYZ Corp, offering cutting-edge widget software, and you've just completed your month-end financial close. The last thing you want is for historical data to change unexpectedly, whether due to a stray click, an enthusiastic team member, or an unforeseen software update. Locked Periods are your safeguard against such unwanted changes.
Locked Periods in Puzzle are a way to prevent modifications to your finalized financial data. Once a period is locked, all users are restricted from making changes to the General Ledger entries up to that date. This ensures the integrity and accuracy of your historical financial records.
Why We Introduced Locked Periods at Puzzle
We noticed a couple of things:
Maintaining Data Integrity: As your business grows, so does the complexity of your financial data. Accidental changes to past periods can lead to significant discrepancies.
Compliance and Reporting: Accurate historical data is crucial for tax filings, audits, and investor reports. Locked Periods help ensure that the numbers you've reported remain consistent.
Our solution? A straightforward way to lock down your completed financial periods, giving you peace of mind that your financial history remains untouched.
Why Should You Care About Locked Periods?
Protection from Unwanted Changes: Prevent accidental or unauthorized alterations to your finalized financial data.
Audit Readiness: Maintain a clear and consistent record for auditors and stakeholders.
Confidence in Reporting: Ensure that once you've closed your books, the data stays consistent for future reference.
How to Use Locked Periods in Puzzle
Setting Locked Periods
Step 1: Navigate to the Locked Periods Section
Go to the "Accounting" tab in your Puzzle dashboard.
Select "Locked Periods" from the sidebar.
Step 2: Lock the Desired Period
Choose the most recent month you wish to lock from the dropdown menu.
Click on the month to set it as the locked period.
That's it! You've now locked that period, and all previous periods, preventing any changes to the General Ledger up to that date.
What Happens When a Period Is Locked?
General Ledger Protection: All entries in the General Ledger up to the locked date are frozen. No edits or deletions can be made.
Integration Syncs: If new data comes in from integrations (like bank feeds or software updates), any transactions dated within the locked period will be posted to the first unlocked period instead.
Visual Indicators: Locked periods are marked with a padlock icon on your dashboard, so you always know which periods are secure.
Example:
Suppose you've locked your books through January 2024. If a new bill dated January 15, 2024, syncs from your accounts payable system after the period is locked, the corresponding journal entry will be posted to February 2024 instead.
Can I Unlock a Period if Needed?
Yes, but proceed with caution.
When to Unlock a Period:
Correcting Significant Errors: If you discover a material mistake that needs correction in a locked period.
Restating Financials: In rare cases where prior financial statements need to be adjusted.
How to Unlock a Period:
Navigate back to the "Locked Periods" section.
Select the period you wish to unlock.
Confirm the action.
Important Notes:
Impact on Subsequent Periods: Unlocking a period allows changes to be made, but entries that were previously blocked will remain in the period they were posted (they won't automatically move back to the unlocked period).
Consult Your Accountant: Before making changes to locked periods, it's advisable to consult with your accounting professional to ensure compliance and accuracy.
Best Practices with Locked Periods
Lock Periods Regularly: As part of your month-end close process, lock each period after completing your financial review and reconciliations.
Use the Monthly Checklist: Incorporate locking periods as the final step in your Monthly Checklist to ensure consistency.
Limit Access: Control who in your organization has the ability to lock or unlock periods to maintain data integrity.
The Bottom Line
Locked Periods are all about giving you control and confidence in your financial data. By preventing unwanted changes to your historical records, you can focus on driving your business forward without worrying about the accuracy of your past financial statements.