Moving to new accounting software is mostly about one date and one set of numbers. The conversion date is the day the new system takes over; the opening balances are the position at the close of the day before. If those balances are right, everything that follows is ordinary bookkeeping. If they are wrong, every report from the new system will be wrong by the same amount until someone finds it, usually at the year end.
Choose the conversion date
| Option | Advantages | Drawbacks |
|---|---|---|
| First day of a new financial year | Clean break; no current-year profit and loss to bring across; comparatives stay in the old system | You may have to wait months |
| First day of a VAT period | VAT returns stay in one system each; no split quarter | Profit and loss year to date must be brought across |
| First day of any month | Fast | Year-to-date figures and possibly a split VAT quarter to manage |
The best date is usually the start of a VAT quarter that is also as close as possible to the start of the financial year. Avoid converting in the middle of a VAT period: you would have to combine figures from two systems for one return.
What to bring across
1. The trial balance
Export the trial balance from the old system at the close of business on the day before conversion. Map each old nominal code to an account in the new chart, merging codes you no longer need. Enter it as a single opening balance journal, or through the software’s opening balance screen.
- If you convert at the start of a year, bring across balance sheet accounts only, with the prior year’s profit moved into retained earnings (or capital for a sole trader).
- If you convert mid-year, bring across the profit and loss accounts year to date as well, so that the year’s reports are complete.
2. Open sales and purchase invoices
The debtors and creditors control balances in the trial balance must be supported by individual open invoices in the new system, otherwise you cannot allocate the receipts and payments that arrive next week. Import each unpaid sales invoice and supplier bill with its original number, date, due date and outstanding amount. The new system usually posts them against an opening balance or conversion account, so they do not double the control balance. Afterwards:
- aged debtors in the new system must equal the trade debtors balance;
- aged creditors must equal the trade creditors balance.
This is a good moment to leave dormant records behind; see closing dormant accounts.
3. Bank accounts
Enter the reconciled balance per your books at the conversion date, not the bank statement balance. Then add any unpresented items, such as cheques written but not cleared or receipts in transit, so the first bank reconciliation in the new system works. Connect the bank feed from the conversion date only, or delete feed lines dated before it, to avoid importing transactions that are already in the opening balances.
4. Fixed assets, stock and other schedules
The trial balance carries totals for fixed assets, accumulated depreciation, stock, accruals and prepayments. Bring across the supporting schedules as well: the fixed asset register, the prepayment schedule, loan balances and any deferred income. Recurring journals, such as depreciation, need setting up again.
VAT and Making Tax Digital
- Finish the last return in the old system if the conversion date is at the start of a VAT period. Submit it from the old software as normal.
- Authorise the new software with HMRC for MTD before the first return is due, and check it can see your VAT obligations.
- Bring across the VAT control balance (any amount owed to HMRC but not yet paid) in the opening trial balance, and pay it as normal.
- Do not re-import historic VAT transactions into the new system. Keep the old system’s records available for the retention period; see how long to keep accounting records.
If you use cash accounting for VAT, open invoices brought across must carry their original dates and VAT so that VAT is accounted for correctly when they are paid.
Prove it
Before you post anything new, run these checks in the new system as at the conversion date:
- Trial balance agrees line by line, after mapping, with the old system.
- Aged debtors and aged creditors agree with the control accounts.
- Bank reconciles to the statement with only the listed unpresented items.
- Balance sheet totals agree; net assets are unchanged.
- VAT control balance agrees with the last return and payment.
Keep a printed or PDF copy of the old trial balance, aged reports and bank reconciliation in the year-end file. When the accountant asks where an opening figure came from, that is the answer.
If you are still choosing a system, switching accounting system explains how Nexbal handles the move, and the cloud accounting implementation plan covers the wider project.