Changing Accounting Software
Can I change my account system mid-financial year? Yes. Sometimes it’s necessary to rethink your options. There are several reasons why you might be forced to change your accounting software, including:
- Your inventory has become huge and more complex
- The need for more structured financial data that can be effectively managed.
- The need for more financial modeling and forecasting
- Increased regulatory requirements
- The need to manage multiple currencies or multiple business entities
However, how easy is it to use a new accounting system mid-year? Well, you will have two software programs, one with the old information covering certain months and the new one. Sometimes this may lead to confusion since your customers might use different accounting software from the one you used to raise invoices.
Additionally, your chances of making errors are extremely high if you use two software packages simultaneously. This way, you can conveniently use your accounting data as training material.
Challenges You Are Likely to Encounter When Making a Switch?
Changing an accounting software is sometimes necessary. But don’t think you will just get a new software program and pick it up from where you left your old software. This is a challenging process, and here are some of the problems you are likely to encounter:
Your new software might not have the same accounting features as your old one and vice-versa. This can be challenging, especially when you still want to store all the data from your old software. But it’s possible to find a way around this by doing research.
Delay in using your opening balances
Moving your accounting systems before completing your financial year means going back and forth several times before you finally get everything right. For instance, if you will use Xero, you will simply start with the opening balance. So, make sure you finalize everything in the previous financial year.
You are not used to the new software
It will take time before finally get used to the new software. Meanwhile, you might not initially like it, and with the lack of familiarity, you might get a couple of things wrong, and everything might take longer. So, you need to have a learning mindset and be ready to make mistakes since the new features might have different names and reports stored in different places.
To avoid these challenges, should you consider moving your old accounting information to the new software? Well, it’s not necessary.
Generally, every accounting software will require that you enter your opening balance during the setup process. This includes information such as whom you owe money, who owes you, and your bank balance during the last financial year.
All these are important in ensuring that you have the correct customer payments and bank balances. Your invoices will also be correctly allocated to avoid losses. To effectively obtain an opening balance, first, get a trial balance from the current software and use it.
The downside of using a trial balance is that you won’t be able to see the sales invoices list raised or even click into the sales. You will simply have a total figure and the correct information on the balance sheet.
For a better balance sheet detail and if you are moving your accounting information to Xero, then consider using Move My Books – a service that will efficiently transfer your QuickBooks and SAGE accounting information without replicating your previous financial year’s accounting information.
If you are not going to use Xero, then ensure that you download all the important reports from the old software.
While changing accounting systems might be necessary, it’s challenging, costly, and time-consuming. However, people and business organizations are sometimes forced to do it because change is inevitable.
Even though there is a wide range of accounting software, Xero and FreeAgent are currently the top-rated on the market. If you manage a complex business, Xero would be a great solution since it has dynamic features. You can conveniently integrate it with 3rd-party payment applications.
Meanwhile, FreeAgent is suitable for individuals who need to frequently invoice their clients or have regular direct debits. If you plan to change your account system, do your research and be ready to learn because the whole process can be challenging. Plan for the new financial year a couple of months earlier to make the right adjustments without pressure.
Gm professional accountants have offices located in London Canary wharf, London Wimbledon ,Ilford Essex and Birmingham.