One of the hot buzz phrases in accounting at the moment is Cloud Migration or Cloud Conversion. It is the process of moving all of your accounting data from one system to another. The major players in this space are MYOB, Intuit’s QBO, Xero and Saasu. Before anyone gets their knickers in a twist or undies in a bunch, these systems were placed in no particular order of preference!
Migrating accounting data is a big deal. A substantial amount of data is contained in this file, it is your business’s life history and it is too valuable to risk. The Golden Rule with any migration is that it must be carefully planned and executed.
In many respects, it can be as important as moving house. You wouldn’t trust this crucial job to just anyone, would you? You would do your research, get references from friends and make sure that your valuables aren’t broken or left behind. Similarly, you should do the same with your accounting migration.
Just like the removals business, there are many service providers promising to move your accounting data from one system to another. Some are promising to do it for free, others give you the option of what you would like to move! These are both totally acceptable, as long as you know what to expect at the end of the process.
The purpose of this blog is to give the untrained business owner some knowledge and consequently, some power, when doing a cloud migration or conversion or engaging a firm to perform their cloud accounting migration or conversion on your behalf.
Step 1: Defining your Expectation
At this point it is crucial that you think about and define, exactly what it is that you expect when the job is completed.
- Do you simply want to transfer all your account balances at a certain period?
- Do you want to migrate historical transaction data, such as debtors and creditors?
- Do you want to migrate payroll transaction history?
- Do you want to migrate historical data from previous accounting periods?
The list could go on, but my point is that there is no single, one-size fits all solution to your data migration. You need to give some thought to this, and discuss with your accountant, what information you want to migrate to your new system.
To explain this further, I will use debtors as an example.
Migrate Debtor Balances Only
This means that the only data that your new system will have, will be total amount that all of your customers owe you. There will be no transaction data.
Migrate current debtor history
You will import, the total that all your debtors currently owe, plus the detail of transactions from say, the previous 12 months.
Migrate current and historical data
This is a migration with the works, you would be able to see that balances of your outstanding debtors in the accounts, plus all current and historical data from your customers.
When it comes to cloud migrations, planning is crucial. The old saying, “failing to plan, is planning to fail”, is never more true.
Step 2: Prepare your Data.
Just like moving house, where you will most likely clean up the old house, perhaps have a garage sale or sell unwanted items on eBay, likewise, you need to clean your data file.
This is a crucial step and we have repaired many migrations that have simply transferred ALL data to the new system, resulting in the same information that was in the old system, creating much disappointment. Take the time to “clean” your accounts, remember, you don’t want to make the mistake of “garbage in, garbage out”.
What I mean by this is that you need to review all your accounting data and archive old, unnecessary data and retain only current information. Take the time to review your accounts, customer cards, supplier cards, employee cards, payroll types and stock lines and identify what information you would like to retain and migrate to the new system.
Most often this will result in only current data being transferred to the new system and you should start by reviewing the following;
Bank & Credit Card accounts
Reconcile all bank and credit card accounts as at the date of the transfer. Write off any stale cheques or amounts you are unlikely to receive from customers.
General Ledger accounts
Reconcile all general ledger accounts, review each of them for completeness and correct any errors that may exist.
Write off bad debts and archive clients that you no longer trade with. Do not migrate them, you can add them in the new system at a later date if required. Transfer only current balances (and history if required), to the new system.
Write off amounts that are not going to be paid, archive creditors that you no longer trade with, do not migrate them. Transfer only current (and historical if desired), balances that are due to be paid.
Archive employee cards who do not have payroll balances in the current year, do not migrate them to the new system. Transfer only current balances paid to employees, including those paid to employees who no longer work for you but have worked for you during the current payroll year.
Stock / Inventory
Archive old stock lines and do not migrate them to the new system. Transfer balances of current stock lines that are available for sale.
Once your data has been reconciled and completed, it is time to print some key reports that you will use to check your data and verify the accuracy in your new system. At it’s most basic you should print the following;
- Trial Balance Report (Balance Sheet and Profit & Loss, if you prefer)
- Completed Bank/Credit Card Reconciliations
- Completed Clearing Account Reconciliations (if any)
- Detailed Debtors Report
- Detailed Creditors Report
- Payroll Summary/Detail Report
- Stocky/Inventory Summary/Detail Report
We refer to these as our Control Reports.
Your accountant may want other reports, so be sure to liaise with them during this process.
Take a copy of your data file and store it in a safe place.
Step 3: Time to let go of the old and embrace the new
At this point, it is time to close the door of the old house behind you and unlock the door to your new home.
After you have clearly defined your expectations and prepared your data for migration, you need to let go and let the experts manage the process.
Step 4: Review
Once the migration is complete, it is time to review and check that all your data has been migrated. At this point it is crucial that you realise how important the time spent preparing your data at step 2 was.
Ensure the following when your migration is complete; ensure that all your data is reviewed and checked for it’s completeness and accuracy, and verified against your Control Reports.
Check the following;
- All general ledger balances
- Bank and Credit Card accounts
- All debtor accounts and balances
- All creditor accounts and balances
- All employee payroll and superannuation balances
- All stock on hand balances
Step 5: Begin again
After the process is completed, you can now resume working in your new data file, knowing that the “old data file”, will still be available for future reference.
If you are not satisfied with the outcome of your cloud migration, we are here to help, send a message and we will be in touch soon.