In general you cannot change the PO if the order/network has a system status CLSD, because the desired behavior of this status is to restrict any activity related to this object.
But I think you have a kind of inconsistency in the process.
Maybe you can explain this sentence in more depth: " user wants to see the PO as inactive and doesnt want it to be as open item for finance to settle"
For me it sounds like this purchase order is not really closed, there is no balance between requisition, order quantity, received quantity and invoice quantity.
Then someone closed the network prior to the PO. I actually expect that a message KO448 was issued in that moment, explaining that there are still open purchase order commitments. As it is only a warning, the status CLSD could be set.
Am I right?