Is it Easy to Switch Accounting Software? - Accounting Firms in UK

 When we first start our businesses, most of us choose accounting software and stick with it.

Even if it annoys us.

The primary reason for this is that switching can feel like a chore. Better to know the devil and all that

But there are times when we are forced to change.

It's possible you've been using Wave and are now aware that they will be discontinuing their UK bank feeds in September 2019.

It's possible that you're switching accountants, and your previous one gave you some specialised software that you can only use if you're a client of theirs.

It's possible that you previously used desktop software such as SAGE, QuickBooks Desktop, or even Excel, and HMRC's MTD (Making Tax Digital) has forced you to reconsider your options, or that business growth has forced you to reconsider your options. In this guide we will learn about the that is it easy to switch accounting software.

Let's talk about the switch, whatever the reason.

Can I change software in the middle of the fiscal year?

Absolutely. And you may have to do so at times.

However, starting in the middle of the year adds the complication of having x number of months information in one accounting package and the remaining months in another.

This is sometimes acceptable because you or your accountant can add the two together, but it can be tedious. Customers may pay you in one accounting software for invoices raised in another, for example.

Having two software packages running concurrently, even for a short time, will result in more work, but it will also increase the possibility of errors.

If you are a few months into the new fiscal year, I recommend reproducing this information within the new software. The benefit of doing so is that you can use your own data as training material. It will also guarantee that you have a full year in one package.

Alternatively, if you are a few months away from the end of your fiscal year, I would recommend sticking with your current package unless you absolutely need to switch right away. You can still start setting up the new one so that it is ready to use, but it will keep the financial years separate.

Should I transfer my old data to the new accounting software?

You are not required to.

As part of the setup process, every accounting software package will require you to enter your opening balances.

Opening balances are similar to the bank balance on the last day of the fiscal year. A list of who owed you money and who owed you money.

It is done to ensure that your running bank balance is correct and that customer payments are allocated to invoices rather than being treated as duplicate sales and so on.

The simplest way to obtain your opening balances is to download and enter a trial balance from your current accounting software.

However, a trial balance, while providing comparisons and a correct balance sheet, does not provide detail. You will not be able to click into sales and see a list of all sales invoices raised; instead, you will see a total figure.

If you need this information and are switching to Xero, there is a service called Move My Books that will transfer your SAGE or Quickbooks data into Xero, effectively replicating your previous years' data.

Otherwise, I recommend downloading and storing all of the reports you require from your old software for future reference.

What issues am I likely to encounter when making the switch?

While switching software is simple – you buy new software, enter the opening balances, and you're good to go – the day-to-day reality is frequently different.

It will always be difficult to transition from one piece of software to another.

So, as a heads-up, here are the five most common issues (which I will reframe as challenges to sound more positive) that you may encounter.

The first challenge is that your opening balances are not ready.

Assume you're switching to your new software on the first day of your new fiscal year, but you haven't finished your previous fiscal year yet.

It's possible that the bank hasn't been reconciled, or you're not sure who owes you money or who you owe money to.

That's fine. Enter your opening balances as a starting point, but be prepared to adjust them once or twice as you close out the previous fiscal year. Most accounting software packages available online will allow you to do so. Xero allows you to begin with just the opening bank balance.

Going back and forth can be tedious at times, but you'll get there. Just be ready for it.

The second challenge is that the information you transferred is incorrect.

Assume you previously prepared your books on SAGE. You've used Move My Books, and all of your SAGE data is now in Xero.

But you've discovered that the SAGE data is incorrect.

The bank was not properly reconciled.

That means Xero is incorrect.

Instead of seamlessly picking up where you left off, you must search through the imported bank data in Xero to find the gaps. Deleting and importing entries, as well as checking what has and hasn't been reported on your VAT returns. You don't trust anything, and because this is new software, it's more difficult to spot and correct errors.

If it appears to be a large task, hire someone to assist you; however, while this is inconvenient, the errors were present in SAGE and would always need to be corrected. So, as difficult as it may appear, consider this a bookkeeping health check, and once completed, your information will be better than it was previously.