Opening entries when changing systems

In a system change, Business Central has to start with the same figures the old system ended with. That covers open customer and vendor entries, inventory and balances on G/L accounts. This is where most projects spend their time on reconciliation. The article explains how to choose a cut-off date, load the opening figures and reconcile so that the first month's accounts are right. There is a short checklist at the end that you can take to your auditor.

Choose a cut-off date

Choose a date when the period is closed in the old system, typically a month-end or financial year-end. Then the figures are stable, and the auditor can see what is closed.

Agree that nothing is posted to old periods in the old system after the date, unless the corrections are moved across as well.

General ledger: balances or entries

Most people load an opening balance as balances per G/L account using one General Journal. For accounts with dimensions you can load balances per dimension value, so that reports per department or project match from the start.

Customer, vendor and inventory accounts must not get an opening balance as ordinary general ledger lines if they are set up to follow subledgers. Here the balance has to come through the related entries, otherwise the general ledger and the subledger balance will not agree. Check the setup on the account and follow Microsoft Learn. Keep the loaded journals and files, so that you can show what was posted when, if the auditor or a colleague asks later.

Customers, vendors, inventory and reconciliation

Load each open invoice, credit memo and payment as an entry with the original document number, posting date, due date and currency. Then payments can later be applied to the right entries.

Use the customer and vendor journals for this purpose. Test in a sandbox first, and reconcile that the total per customer and vendor matches the old system.

Inventory is loaded as an Item Journal with quantity and unit cost per item and location. Do a physical count close to the cut-off date, so that the quantities are true. Remember serial and lot numbers and bins if you use them.

Reconcile the inventory value in the item journal against the inventory account in the opening balance.

Prepare a reconciliation that can be shown to the auditor.

Trial balance in the old system equals trial balance in Business Central at the cut-off date.
Customer balance in the general ledger equals the sum of open customer entries.
Vendor balance in the general ledger equals the sum of open vendor entries.
Inventory value in items equals the inventory account.
VAT settlement and bank accounts reconciled.

Currency and accruals

Open entries in foreign currency need both the amount in currency and the amount in local currency. Use the rate from the cut-off date, so that the value matches your earlier accounts. Also check how unrealised exchange rate differences behave in the first period after the switch.

If you have accrued entries, for example prepaid expenses, they also have to come across as balances or entries with the right dates.

Rehearse the load and check afterwards

Load the opening figures at least twice in a sandbox before you do it in production. The first time you find format errors. The second time you find differences in amounts. When the reconciliation agrees without manual corrections, you are ready.

Write the steps down in the order you will use them. On the day, nobody should have to improvise.

When the opening figures are loaded, run a trial balance, a customer and vendor balance list and an inventory valuation report. Compare them with the figures you saved from the old system.

Then post the first real transactions and check that they land correctly. Only then can you declare the opening finished and close the period before the cut-off date.

Help with the project

Addverk is a new Business Central partner. We plan and carry out opening loads as part of the implementation service. See the prices page for our fixed prices.