For many businesses, accounting software is something that grows organically. A business may start with spreadsheets, move to desktop accounting software, add separate invoicing tools and eventually find itself relying on several disconnected systems.
At some point, the processes that once worked well begin taking too much time.
Moving to a cloud accounting platform such as Xero can simplify these processes and provide better visibility over your finances. However, a successful move involves more than simply opening a Xero account and entering a few balances.
Understanding what is involved before you start can make the transition considerably smoother.
Why businesses are moving to cloud accounting
Traditional accounting systems often rely on software installed on a particular computer, manual backups and information being transferred between business owners, bookkeepers and accountants.
Cloud accounting changes this by keeping the accounting system online.
With Xero, authorised users can access the same accounting information from different locations, making it easier for business owners, finance staff and advisors to work with current information.
Features such as online invoicing, bank reconciliation, financial reporting, expense management and integrations with other business applications can also bring more of the financial process into one system.
For Namibian businesses operating across different towns, working remotely or collaborating with an external accountant, this accessibility can be particularly useful.
Start by understanding your existing accounting system
Before migrating to Xero, it is important to understand what you are moving from.
This includes more than your general ledger.
Consider your:
- customer and supplier records;
- outstanding invoices and bills;
- bank accounts;
- chart of accounts;
- VAT settings;
- fixed assets;
- opening balances;
- inventory, where applicable; and
- historical financial information.
This is also a good opportunity to clean up information that has accumulated over time.
Duplicate customer accounts, unused ledger codes, old suppliers and incorrectly allocated transactions do not necessarily need to follow you into the new system.
A migration should ideally result in a cleaner accounting environment, not simply reproduce every problem from the old one.
Decide when the changeover will happen
A clear conversion date makes the migration much easier to manage.
For some businesses, the beginning of a financial year may be the most convenient point. For others, moving at the beginning of a VAT period or month may be more practical.
The correct approach depends on the business and how much historical information needs to remain readily available.
It is also important to decide whether detailed historical transactions will be migrated or whether the new system will begin with verified opening balances while the previous system is retained for historical reference.
There is no single approach that is right for every business.
Configure Xero around the business
One of the most important parts of implementation is configuring the system correctly from the beginning.
The chart of accounts should reflect the way management wants to understand the business. Tax settings, invoice templates, users, payment terms, tracking categories and reporting structures should also be considered during setup.
A generic configuration may technically work, but a system designed around the business can provide much more useful information.
For example, a business may want to analyse income and expenses by branch, business activity, project or another meaningful category. Thinking about these requirements during implementation makes future reporting far easier.
Connecting your banking information
Bank reconciliation is an important part of maintaining accurate accounting records.
Where supported by the relevant bank and connection method, bank feeds can bring transactions into Xero automatically. Xero can then assist with matching those transactions against invoices, bills and other accounting entries.
Where a direct bank feed is not available, bank transactions can also be imported using supported statement formats.
Regardless of the method used, transactions still need to be reviewed and correctly allocated. Automation can reduce repetitive administration, but good accounting controls remain important.
Test before relying on the new system
Before considering a migration complete, key balances should be checked against the previous accounting records.
This normally includes items such as bank balances, outstanding debtors, creditors, VAT balances and major balance-sheet accounts.
Invoice layouts and workflows should also be tested.
The goal is to confirm that the information entering the new system is accurate and that the people who will use Xero understand how the new processes work.
Training is just as important as implementation
Even a well-configured system can become difficult to manage if users do not understand it.
Staff responsible for invoicing, capturing purchases, reconciling transactions or preparing reports should understand not only which buttons to click, but also how their actions affect the accounting records.
A little training at the beginning can prevent months of correcting avoidable errors later.
The move should improve more than your bookkeeping
Moving to Xero should not simply replace one accounting package with another.
It should be an opportunity to review how financial information flows through the business.
Are invoices being sent quickly enough? Are outstanding accounts followed up consistently? Are bank transactions reconciled regularly? Can management see how the business is performing without waiting until year-end?
When the implementation is approached with these questions in mind, cloud accounting becomes much more than an administrative tool.
It becomes part of how the business is managed.
How Xilver Lining can help
Xilver Lining assists businesses with Xero implementation, setup, migration, training and ongoing support.
Our approach starts with understanding how your business currently operates before recommending how Xero should be structured. The aim is to create an accounting environment that is practical to use, supports accurate reporting and provides meaningful financial information for decision-making.
Whether you are moving from spreadsheets, desktop accounting software or another accounting platform, careful planning can make the move to the cloud a much smoother process.