Steps to Migrate the books over to Xoro
Migrating the books over to a new system is one of the most important tasks. If not done in the right way, this can lead to major problems down the road.
Before we start talking about migration, let’s talk about the timing of migration. Whether you move your books at the end of the fiscal year or within the fiscal year, the timing has an impact on what account balances you will end up migrating.
For example, if you are migrating your books at the end of the fiscal year, then you will be bringing over only the balance sheet account balances.
But, if you’re migrating your books within the fiscal year, then you need to bring over both balance sheet account balances as well as the profit and loss account balances. You do not need to bring over profit and loss account balances at the end of the fiscal year-end as those accounts reset to zero at the end of the fiscal year.
And opening balances for the GL accounts are not the only things that you need to bring over during migration, Nonposting GL Transactions related to open sales orders, open purchase orders, open work orders or manufacturing orders needed to be brought over as well.
What reports do you need from your previous system to start the Migration?
Here are some of the reports that you need as of the migration date from your existing system to bring the books over to Xoro.
For example let’s say your migration date is May 1, 2020. And your fiscal year starts on January 1, 2020
- Trial balance
- Income statement
- Balance sheet
- AR aging detail
- AP aging detail
- Inventory valuation detail
In addition to the above financial reports, you will need the following reports to bring open Sales Orders, Purchase Orders, and Manufacturing Orders
- Open sales order detail report
- Open purchase orders detail report
- Open manufacturing orders detail report
Steps to migrate books over to Xoro
Like we discussed above, the whole purpose of migrating the books over is to bring over the opening balances for all the accounts. At the end of the migration, the trial balance of your previous system should match exactly with the trial balance in Xoro as of the migration date.
Now, Let’s have a look at how are we going to migrate Different types of accounts into Xoro.
Let’s divide the trial balance account into 8 different categories
- Bank
- Inventory
- Accounts receivable
- Accounts payable
- Customer Deposits or an Unearned revenue
- Pre-payments or prepaid expenses
- Sales taxes
- All others
Before bringing over account balances for all the trial balance Accounts, it is important to select the suspense account that you’ll be using for bringing over the books. Generally, this suspense account Is “opening balance equity”. And at the end of the migration, the total balance in your opening balance equity account within Xoro should be equal to the retained earnings balance on the trial balance in your previous system as of the migration date.
Note: Please make sure that you have reconciled and closed the books in your previous system before you’re bringing over the opening balances.
Bank
In order to bring over the bank balances, you need to have the following
- Bank statement balance as of migration date
- Outstanding checks as of migration date
- Outstanding deposits as of migration date
The journal entry resulting in the combination of the above three will make up the account register balance in Xoro.
Here are the Examples of JE for ending statement balance, Outstanding checks, and outstanding deposits. Again the point to be noted here is that we are trying to get to the same register balance that is In your previous system. The common mistake made here Is that If you create a single journal entry to bring the registered balance into Xoro without considering the ending bank statement balance, outstanding deposits, and outstanding checks altogether.
Say your Ending Statement Balance is $50,000, Outstanding Checks that didn’t clear the bank: $6000, Outstanding Deposits that didn’t get deposited in the bank: $5000
Register Balance: $50,000 – $6000 + $5000 = $49,000
JE 1: Bank Statement Balance
Bank Account | Debit | $50,000
Opening Balance Equity | Credit | $50,000
JE2: Outstanding Checks
Bank Account | Credit | $6,000
Opening Balance Equity | Debit | $6,000
Note: The outstanding checks entry can also be done through the outgoing payment module in case you want to record the actual Payment method and associated check numbers.
JE3: Outstanding Deposits
Bank Account | Debit | $5,000
Opening Balance Equity | Credit | $5,000
Note: The outstanding deposit entry can be done through the bank deposit module.
Repeat this process for all of your bank accounts until all of them are brought over successfully.
At the end of the upload, please check that your bank balance in the previous system matches exactly with the bank balance in Xoro as of the Migration date.
Inventory
In order to upload the Inventory, You will need the inventory valuation summary report from your previous system as of the migration date.
The inventory upload is done using the “Upload Inventory” module.
At the end of the upload, please check that your inventory balance in the previous system matches exactly with the inventory balance in Xoro as of the Migration date.
Very Important: Please note that the inventory should be brought over at the average cost not at the standard cost in Xoro. So along with the quantity numbers, please update the average cost or unit cost within the Xoro template.
If there is no average cost value provided in the template, the system will by default use the standard cost of the item. This will have an impact on the total asset value of the inventory reflected on the balance sheet.
Accounts Receivable
In order to upload the account receivable balances, You will need the AR aging detail report from your previous system as of the migration date.
Please transform the data into Xoro Upload invoices and Upload Credit Memos template and perform the uploads.
Please note that the uploads are done to preserve the aging of the invoices. During the upload process, the system will pick up one single item per invoice. This item is generally called a miscellaneous item. Please note that the income or expense account associated with this item during the upload should be opening balance equity or the same suspense account that you’re using for bringing over the books.
At the end of the upload, please check that your AR balance in the previous system matches exactly with the AR balance in Xoro as of the migration date.
Accounts Payable
In order to upload the account payable balances, You will need the AP aging detail report from your previous system as of the migration date.
Please transform the data into Xoro Upload Bills and Upload Vendor Credits template and perform the uploads.
At the end of the upload, please check that your AP balance in the previous system matches exactly with the AP balance in Xoro as of the migration date.
Please note that the uploads are done to preserve the aging of the bills. During the upload process, the system will pick up one single item per bill. This item is generally called a miscellaneous item. Please note that the income or expense account associated with this item during the upload should be opening balance equity or the same suspense account that you’re using for bringing over the books.
In order to bring the customer deposits separately, please use the customer deposit Module within Xoro to enter the transactions.
The date to be used in all the transactions should be either the migration date or actual dates lesser than the migration date.
Again, the bank account to be used here should be opening balance equity. And, each customer deposit can be associated with a corresponding Sales Order.
In the end, please compare the customer deposit account balance in Xoro to the Customer deposit account balance in your previous system. They should match exactly the same.
You can use the journal entry module for this process as well if customer deposits do not need to be associated with Sales Orders.
In order to bring the Prepayments separately, please use the Prepayments Module within Xoro to enter the transactions.
The date to be used in all the transactions should be either the migration date or actual dates lesser than the migration date.
Again, the bank account to be used here should be opening balance equity. And, each of the prepayments can be associated with corresponding Purchase Orders.
In the end, please compare the Prepayments account balance in Xoro to the Prepayments account balance in your previous system. They should match exactly the same.
You can use the journal entry module for this process as well if Prepayments do not need to be associated with Purchase Orders.
Sales Taxes
Use the sales tax adjustment module to bring over the sales taxes.
Go to prepare tax return > Select your sales tax form> Use the adjustment line to create the opening balance adjustment.
Again the date to be used here Is the migration date and the offset account is opening balance equity.
All Other Accounts
For all the other accounts except the ones mentioned above, use the journal entry Module within Xoro Or upload the journal entries module to bring the opening balances.
Open SO’s/ PO’s and MO’s
As an essential part of the Go-live process, It is required to bring over all the open sales orders, open purchase orders, and open manufacturing orders.
Use Xoro’s upload sales order, upload purchase orders, and upload manufacturing orders template to bring over all the open orders into the system.
Please note that upload sales orders, upload purchase orders, upload manufacturing orders are non-posting GL transactions and have no effect on the account balances.
Historical Sales and Purchases
If you need to bring over all the historical sales and purchases prior to the migration date, then those could be brought over as non-posting GL transactions.
For example, all the historical sales prior to the migration date could be brought over as closed sales orders and all the historical purchases prior to migration could be brought over as closed purchase orders. Note: The non-posting GL transactions have no effect on the account balances.
Matching Trial Balance
When the trial balance in Xoro Matches exactly with the trial balance of your previous system at the migration date, You have successfully moved over the books.
Also read, Setting up Beginning Balances for Bank Reconciliation
