Beautifying Your Financial Picture

5 Tips For Switching Your Business From Manual Accounting To Software

by Darryl Nguyen

Many small businesses start out using informal, manual bookkeeping methods — pen and paper, spreadsheets, ledger books, and the like. But as your enterprise grows, it will eventually become time to switch to accounting software. How can you make this shift successful? Here are five tips for a smooth transition.

1. Learn the Software First. The change from manual to automated accounting is a big one, so take a long-term view of it. Don't rush into data entry and using the functions in real life before you've learned how the software works. Take tutorials, talk to your accountant, or work with a bookkeeper to familiarize yourself with what needs to be done. 

2. Pick the Right Date. Timing is key to smoothly transitioning balances from one system to another. The best time to do so is at the start of a new accounting year, whether that's a new calendar year or fiscal year. If you can't wait that long, choose the beginning of a quarter or a month.

3. Finalize That Date. Once you choose the date of the transition, make this a clear target. Your goal is to complete everything prior to that date in the old, manual system and everything past it in the new one. There should be no overlap. This means ensuring you have all the bills, customer invoices, expenses, checks, and accrual items entered before you move any balances to the software. 

4. Reconcile Everything. Reconciliation is the process of confirming a balance by comparing two different sources of data. The most common thing to reconcile is a bank balance — using the bank's records of incoming and outgoing money to make sure yours are accurate. Do this before transferring any balances to the software. Reconcile vendor and customer accounts using their records. And use paper documents to reconcile ledger balances if possible. 

5. Keep Concurrent Books. Once you enter the beginning balances and start using the software, continue recording the same activities in your old system. This is a test period to be sure your books are accurate and you understand how to use the new system. Keep concurrent books for a short period, such as a few months. Discontinue when things are going well.

Where to Get Help

Transferring your small business from paper-based bookkeeping to software bookkeeping is a complex task. Your best resource is professional assistance from a skilled accountant. Make an appointment today to discuss your transition and get help in both planning and executing it. For more information on accounting, contact a professional near you.