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Xero - Conversion Process

General

Do not amend or delete converted transactions

If a historic balance must change please create a new adjusting journal, customer/supplier invoice, customer/Supplier credit note or bank transaction to achieve the desired adjustment.

The 2 main reasons for this is the following:

  1. The Xero API currently does not allow bank statement lines to be imported and reconciled. Thus we create direct bank transactions during conversion. If these are deleted they are gone, it will not appear as unreconciled transactions in Xero.
  2. In certain scenarios (because of system differences) we have to use suspense accounts to get the data across to Xero. Deleting or amending these transactions causes the suspense account to go out of balance.

Foreign currency transactions

We are currently unable to convert foreign currency transactions, all foreign currency transactions will be converted using the base currency as standard. This means that you will need to adjust the balances of foreign currency bank accounts and foreign currency customers and suppliers.

We advise you to do the following:

  • Bank accounts: Create a new bank account using the correct applicable currency. Transfer the balance of the converted bank account to the newly created foreign currency bank account by using the correct currency ratio. NB remember to make sure the balance in Xero of the new foreign currency bank account reconciles to the physical bank statement.
  • Contacts: Create a new (foreign currency) contact account. You will now need to move the balance of the converted contact to the newly created foreign currency contact. You can do this by creating an Invoice/Bill/Credit note to a suspense account for the entire balance of the base currency contact. Then you need to move the balance of the suspense account again to the newly created foreign currency contact. You can do this by creating an Invoice/Bill/Credit note to a suspense account for the entire balance in the required currency using the appropriate currency rate contact.

VAT reporting (mid VAT period conversions)

Due to certain workarounds used the VAT report in Xero may not reflect correctly as it was in the previous system. Custom VAT rates in the previous accounting system, different transaction reporting and tax effective date in the previous system and transactions with different debit an or credit dates in the previous system are the most common causes of this.t

If you converted mid VAT period simply generate the VAT report in the previous system for the converted transactions, then generate the VAT report in Xero for transactions processed post-conversion. Simply add the two reports together to calculate final details for VAT submission. This will only need to be done for the first VAT submission in Xero, going forward only the VAT report in Xero will be used for VAT submission purposes.

Also, note due to differences in rounding treatment between systems we may need to create a separate line item on documents that will represent the VAT movement for specific line items when these differences in rounding treatment occur.

PHASE 1 - ACCOUNTS AND OPENING BALANCES

General ledger Accounts

Distinct system differences:

Xero does not allow duplicate general ledger account names. When duplicate account names occurred in the previous system, the general ledger account number will be added to the account name.

General ledger account fields that will be converted:

  • Account number;
  • Account name;
  • Account default tax rate (mapped to default Xero VAT rates); and
  • Account type.

2 Types of accounts will be created in Xero:

  1. Bank Accounts: Note: the actual banking account numbers a required field in Xero and will be created as “1211211234567” during the conversion. This needs to be updated post-conversion if this is not updated the bank feeds will not be able to function.
  2. Other general ledger accounts

Customer and Supplier Accounts

Distinct system differences:

Xero does not allow duplicate customer/supplier account names. When duplicate account names occurred in the previous system, the customer/supplier account number will be added to the account name.

Xero uses a single database table for customers and supplier ie “Contacts”. Because of this a “(C)” will be added to the customer account numbers and a “(S)” will be added to supplier account numbers during conversion. This will ensure contacts are unique and will separate customers and supplier post-conversion.

Customer and Supplier account fields that will be converted:

  • Customer/Supplier account number;
  • Customer/Supplier account name;
  • Customer/Supplier First name (will be combined with Last name);
  • Customer/Supplier Last name (will be combined with First name);
  • Customer/Supplier Postal address line 1;
  • Customer/Supplier Postal address line 2;
  • Customer/Supplier Postal address line 3;
  • Customer/Supplier Postal address line 4;
  • Customer/Supplier Postal address postal code;
  • Customer/Supplier Physical address line 1;
  • Customer/Supplier Physical address line 2;
  • Customer/Supplier Physical address line 3;
  • Customer/Supplier Physical address line 4;
  • Customer/Supplier Physical address code;
  • Customer/Supplier Phone number;
  • Customer/Supplier Mobile number;
  • Customer/Supplier Fax number;
  • Customer/Supplier Email address;
  • Customer/Supplier Tax number; and

Inventory Items

Distinct system differences:

Xero only provides the option to store a single preset selling price per inventory item. During conversion, the first selling price will be stored to the VAT inclusive selling preset price in Xero.

Inventory Item fields that will be converted:

  • Item code;
  • Item description; and
  • Item selling price as explained above.

General ledger, Customers and suppliers opening balances

The following workarounds will be used to set the Customer and supplier system account opening balances on conversion date:

  • The customer and supplier opening balances will be set by creating invoices/credit notes for each customer/supplier balance on take-on balance date;
  • All other general ledger account balances will be set on conversion opening balance date.

Note: no inventory item opening quantities and values will be converted, this will need to be added post-conversion.

PHASE 2 - DETAIL TRANSACTIONS

Distinct system differences:

Conversion suspense accounts:

The main goal of the transaction phase is to mirror the general ledger movements in Xero. Therefore in the scenario where a single transaction has different debit/credit movement dates, different transaction types are bundled together with a single transaction code, or because of system differences a conversion suspense account is used to get the transaction movements across during conversion.

For example:

Sage Pastel transaction:

 DATEDEBITCREDIT
Bank account28/02/2019100
Sales 00115/02/201950
Sales 00211/02/20950

Xero transactions during conversion:

 DATEDEBITCREDIT
Bank account28/02/2019100
Conversion Acc28/02/2019100
Conversion Acc15/02/201950
Sales 00115/02/201950
Conversion Acc11/02/201950
Sales 00211/02/201950

In the above example, you will see the total movements against the conversion account add up to ZERO. The net result for the general ledger post-conversion is the same.

The following transaction types will be created in Xero:

  • Customer invoices;
  • Supplier invoices;
  • Customer credit notes;
  • Supplier credit notes;
  • Manual journal entries;
  • Bank transaction: Spend money account;
  • Bank transaction: Receive money account;
  • Bank transaction: Pay Supplier;
  • Bank transaction: Receive Customer; and
  • Customer/Supplier Allocations.

Customer invoices

Note: all debit movements against customer accounts will be converted as customer invoices.

The following fields will be converted to Xero:

Invoice lines:      

  • General ledger account;                        
  • Line description;                        
  • Quantity = 1;
  • Line item total = unit Price;
  • Line VAT; and
  • Line VAT type.            

Invoice details:

  • Due date = invoice date plus 30 days as standard;
  • Invoice date;
  • Customer;
  • Customer Delivery address;
  • Customer Postal address; and
  • Document number. *

* If document number is not unique (duplicates in the previous system) OR document does not end with a numeric number (Xero requirement), a five digit random number will be added to document number.

Supplier invoices

Note: all credit movements against supplier accounts will be converted as customer invoices.

The following fields will be converted to Xero:

Invoice lines:       

  • General ledger account;                        
  • Line description;                        
  • Quantity = 1;
  • Line item total = unit Price;
  • Line VAT; and
  • Line VAT type.            

Invoice details:

  • Due date = invoice date plus 30 days as standard;,
  • Invoice date;
  • Supplier;
  • Supplier Delivery address;
  • Supplier Postal address; and
  • Document number. *

* If document number is not unique (duplicates in the previous system) OR document does not end with a numeric number (Xero requirement), a five digit random number will be added to document number.

Customer credit notes

Customer credit notes will be created when the following conditions occur:

  • Credit movement against a customer; and
  • No bank account debit movement with an identical transaction ID and transaction date.

The following fields will be converted to Xero:

Credit note lines:

  • General ledger account;                        
  • Line description;                        
  • Quantity = 1;
  • Line item total = unit Price;
  • Line VAT; and
  • Line VAT type.            

Credit note details:    

  • Credit note date;
  • Customer;
  • Customer Delivery address;
  • Customer Postal address; and
  • Document number. *

* If document number is not unique (duplicates in the previous system) OR document does not end with a numeric number (Xero requirement), a five digit random number will be added to document number.

Supplier credit notes

Supplier credit notes will be created when the following conditions occur:

  • Debit movement against a supplier; and
  • No bank account credit movement with an identical transaction ID and transaction date.

The following fields will be converted to Xero:

Credit note lines:

  • General ledger account;                        
  • Line description;                        
  • Quantity = 1;
  • Line item total = unit Price;
  • Line VAT; and
  • Line VAT type.            

Credit note details:

  • Credit note date;
  • Supplier;
  • Supplier Delivery address;
  • Supplier Postal address; and
  • Document number. *

* If document number is not unique (duplicates in the previous system) OR document does not end with a numeric number (Xero requirement) then 5 digit random number will be added to document number.

Manual Journal entries

The following fields will be converted to Xero:

  • Line Total;
  • Line Date;
  • Line VAT Type;
  • Line VAT total;
  • Line Description; and
  • Line Reference.

Bank transactions

Three types of bank transactions will be created during conversion:

  1. General ledger bank transactions;
  2. Supplier Payments; and
  3. Customer Receipts.

Each bank transaction type will be created when the following conditions occur (Transaction ID and date have to match in all instances):

  1. General ledger bank transactions
    1. Debit movement on bank account = receive money bank transaction OR Credit movement on bank account = spend money bank transaction; and
    2. Movements on general ledger accounts.
  1. Supplier payments
    1. Credit movement on the bank account; and
    2. Debit movement on Supplier account.
  1. Customer Receipts
    1. Debit movement on the bank account; and
    2. Credit movement on the Customer account.

The following fields will be converted to Xero:

Bank transaction lines:

  • General ledger account/Supplier/Customer;
  • Line VAT type;
  • Line VAT total;
  • Line type: Account/Customer/Supplier;
  • Line total amount;
  • Line Description; and
  • Line reference.

Bank transaction details:

  • Bank account ID;
  • Bank transaction date;
  • Bank transaction reference;
  • Bank transaction description;
  • Bank transaction Total (Total > 0 = receive transaction; Total < 0 Spend transaction);
  • Bank transaction description;
  • Accepted = true;
  • Reconciled = true; and
  • Payee = “Bank Transaction”.

Customer/Supplier Allocations

Customer and supplier allocations will be done on a FIFO basis excluding open invoices as per the previous system. This will result in a similar customer and supplier age analysis post-conversion.

Note in cases where open customer/supplier invoice data is corrupt the FIFO method will be used on all invoices for the applicable customer or supplier.

The following fields will be converted to Xero:   

  • Allocated to document ID (Invoices);
  • Source document ID (Customer receipt / Supplier Payment / Customer credit note / Supplier credit note); and
  • Allocation total.