So, you’re deciding on purchasing a new accounting system. Everyone is excited about how easy things will become, and now you’re facing your first major hurdle: Converting data from your old system to the new one. You may be regretting your decision when you start to think about the amount of work needed to convert your old data.
Converting data does not have to be traumatic. Here are some tips on data conversion:
- Opening Balances - At a minimum, you need an accounting correct starting point in the new software. That means opening balances for the General Ledger, Accounts Payable, Accounts Receivable and Inventory must be the same in the new system as the old.
- History - Most companies try to bring over massive amounts of history. This adds to the work load. In almost all cases, companies are not going to lose their old system, so they can keep it around for a while to have access to that history, if needed. After a year or two, most of that history will be irrelevant.
- Plan Your New Chart of Accounts - Copying items from old to new may not be the best idea. For example, a Chart of Accounts in the new system may be structured differently than in the old application. A straight copy of the old chart may not allow you to use all of the new features. QuickBooks does not use Account Numbers in its chart for reporting; and higher level systems may give you the option for a segmented chart using each segment as a reporting element. Copying the QB format as it is may reduce your reporting options.
- Evaluate & Clean Up Your Data - Bad data copied from an old system to a new one is still bad data. Take time to evaluate the data you are bringing in. Moving 1,000 vendors into the new system where 800 have old or bad addresses just perpetuates the problem. Take the time to clean up your data and evaluate what you need to start with. You can always add Customers or Vendors as you go. Just bring over the ones for the opening balances.
- Create a Test Environment - Set up a sandbox or test environment where you can test different scenarios before committing to them. Test inventory numbering. Test the GL structure and reporting. It is easy to do with just a few items instead of thousands. You can eventually use the sandbox for training.
- Parallel Systems - Most companies try to run both systems at the same time for a month or more. This can be grueling on overworked staff. Use the sand box to run test batches and compare. Unless you have custom software, you only have to test the users’ knowledge and the system settings, not the core logic.
My recommendation is to bring in 12 months of GL activity as a monthly Journal entry for each month’s activity. This will allow you to run comparative Financial Statements, bring in open Invoices, open vouchers and set your inventory quantities to equal the old system. Run your monthly reconciling reports like an Aged Payables and a GL Trial Balance and compare the two systems. If all is good, you’re ready to rock. Keep your old system alive for reference.
With proper planning this will not be a daunting task. We have converted four companies for one organization in less than 45 days from planning to go-live.
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