There are so many advantages to using a cloud based accounting that migrating from a locally installed system, such as Sage50, Avantage or Acomba, is not even an option. However, data migration is a barrier for many due to the lack of knowledge or accounting expertise.
Here are 4 ways to migrate your accounting data to the cloud, from the simplest to the most complex. It is important to start with reliable and up-to-date accounting data and to decide on the timing of the migration. It is best to make this transition at the beginning of a fiscal year.
Here are 4 ways to migrate your accounting data to the cloud:
1. Migrate Only Opening Balances
This is the easiest way, but it must be done methodically. The basic data must be migrated:
- Customer list
- List of suppliers
- Chart of accounts
- List of projects
- List of items or products
Then you have to deal with the auxiliaries. What is an auxiliary? It is an independent journal that refers to the general journal, which counts all the accounting transactions. The auxiliaries allow for more detailed information than the general journal. For example, it would not be possible to get a list of unpaid customer invoices from the general journal
It is therefore necessary to have a complete list of unpaid invoices on the migration date, both for accounts payable and accounts receivable.
If you have stock in inventory, you should also have a list of the items that make up the stock with the purchase costs of each.
Then, you need to get the trial balance: the aggregation of the income statement and balance sheet at a given date. You need to make sure that you have reliable data, that the reconciliations of the accounts have been done to ensure the accuracy of the data before the implementation of the migration plan to the cloud.
Since it is impossible to migrate on January 1, for example, with the financial results as of December 31 compiled, a transition period must be planned, where the transactions after the implementation date will be processed in the new system while the transactions of the previous period must be processed in the old.
Once the demarcation has been completed, it will be possible to import the data. Also, it is possible to go back and correct opening balances once they have been entered, especially for tax entries or the accountant’s regularizations at the end of the year.
2. Migrate Historical Auxiliary Data and Opening Balances
Sales data is often the most useful data for companies. It is often used to adjust sales pitch to a customer, make marketing campaigns or send out product update lists.
Since cloud systems calculate revenue based on a date, it is possible to import only sales data, from the accounts receivable auxiliary to have historical data, without migrating more data.
Of course, looking at an income statement for a previous period will not give meaningful results for other items in the chart of accounts.
You should therefore proceed according to method 1, except for the accounts receivable auxiliary where you will have to import all the data for the desired time range. We have previously migrated 8 years of history for one client.
3. Migrate End of Period Balances and Auxiliaries
It is interesting to see year-to-year comparative financial data. If the auxiliary data is less valuable to the company, it is possible to migrate the end of period balances to the cloud by journal entry. This way, when an income statement or balance sheet is requested, it will be possible to compare it with the same period in the previous year
Note that some temporary accounts may have to be used since in many cases the software does not allow the use of subledger accounts or system accounts (such as accounts payable, accounts receivable) directly in the journal entries.
This may seem simple, but in practice you must make sure that you take into account the amounts that will be imported into the auxiliaries, as we saw in the first method that we need them.
4. Full Historical Migration
This method is the most complex and risky for several reasons. When you migrate, you generally want to take advantage of the opportunity to get rid of all the clutter. Whether in customers, suppliers, articles or accounts of the accounting chart. This will involve a conversion step between the values of the old system and the values of the new system.
Then, as mentioned in the third method, some accounts have limitations, which implies that one has to find a strategy to work around the problem and be able to import the data.
Then, the original system must be able to provide an output of the data to be migrated, which is not always the case or sometimes the format of the output requires a lot of manipulation to clean the data, format it, convert it and finally import it.
Finally, quality assurance is required to ensure that both the old and new systems provide equivalent financial information.
In terms of financial risks, there will be a lot of work to do, involving costs and possibly cost overruns. As we know, IT projects are generally underestimated in complexity.
And then there are risks associated with human resources. Do you have competent resources to take charge of this migration? You should make sure you have a mix of software and accounting expertise, because you need to ensure the integrity of the information that will be migrated.
Finally, there is the risk related to the deadline: will you be able to migrate within the desired timeframe and avoid impacts on your operations? Unfortunately, delays often have an impact on invoicing and, in turn, on cash receipts. The company’s cash flow is thus affected.
As you can see, a migration project requires careful thinking and preparation. It can be daunting, but the more time you have, the more you can plan the steps to ensure that all aspects of your project are taken into account. And if your accounting data is reliable and up to date, you already have a great starting point.
Cofinia offers migration services to its clients. Our experts will offer you the best solution adapted to your needs and will choose the optimal migration tool for the migration of your accounting data centers.