Switching Accounting Software? 7 Steps for a Smooth Transition

Changing accounting systems doesn't have to be a headache. When done right, it can pay off in massive ways. Here are 7 steps to help.

switching accounting software

Maybe you’ve outgrown free software and are looking for something with greater capabilities. Maybe you’re a first-time business owner who finds their current platform overkill for their needs, making managing finances too intimidating. Or maybe you just want to be able to do more work with less effort.

Whatever your reasons, the right accounting software can help you with all this and more. However, the transition process is a delicate one. So, it’s important to start with a well-thought-out plan. If your business is ready to change accounting software platforms, here’s how to do it in 7 steps.

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    How to Transition to a New Accounting Software in 7 Steps

    1. Choose Your New Software Provider

    The transition to new accounting software starts with finding a new provider. Your decision is an important one, as the right software can accelerate your growth while also slashing the amount of time, money, and effort needed to manage your business.

    To start, read the following section for some questions to ask yourself before choosing your new software. Do your research and narrow down your platform options based on the features your organization needs the most. If possible, ask other business owners in your industry about their experiences and recommendations.

    If you work with an accountant, keep them updated throughout your decision-making process. With their expertise and knowledge of your business, they can provide some input on the software that’s best for your needs.

    2. Set a Cutoff Date

    Next, choose a cutoff date—the day your business moves from your current accounting software to your new one. This will help keep you and your team on track during the transition period.

    Keep in mind that, depending on the complexity of your business, changing accounting software can take anywhere from a couple of days to a few months or more. Make sure to factor that in when you set your cutoff date.

    3. Check for Integration Issues

    accounting software checklist

    Even the best software will fall short of expectations if it’s incompatible with your existing IT infrastructure. If your top choice requires greater specs than you have available, you may need to upgrade your technology or fall back to your next best option.

    To keep things lean, consider a cloud accounting software solution over desktop software. Many of today’s top providers only require a laptop or smartphone and an internet connection to use their applications. And because your data is stored in the cloud, you can access your payroll reporting information and other financial data anytime and anywhere.

    4. Choose What Data to Import and Prepare It for Migration

    Before importing your existing data into your new software, first, decide what data you need to keep and then prepare it for migration.

    You’ll want to keep information like your:

    • Chart of accounts
    • Clients and vendors
    • Accounts
    • Invoices and bills
    • Staff data and payroll history
    • Inventory item records

    Next, back up all your data from your current system and ensure it’s accessible in case anything goes wrong during the import process. Now you’re ready to manipulate your data for a more seamless migration to your new accounting platform.

    Remove unwanted information and correct any mistakes and inaccuracies in your data, so they’re not transferred between the 2 systems. Keep in mind that tax authorities may require you to hold onto your financial records for several years, so don’t get rid of anything you may need in the future.

    5. Import Your Data Into the New System

    You may be able to import data using CSV files, but many accounting solutions require imported data to be formatted in a specific way, so the software recognizes it. Check with your software company to determine the correct format to use, as each provider is different.

    Once you’ve arranged your data in the recommended format, do a trial import with placeholder data to ensure the format works and the platform reads the information properly.

    After you’ve ironed over any formatting issues, you’re ready to transfer your data to the new system. You can do this all at once or over a period of time. Just make sure not to rush the process—you don’t want to make a mistake that negates all of your careful planning so far.

    6. Test the Migrated Data

    At this point, your data is now available in your new accounting system, but your work isn’t done just yet. The final steps of this process help cover all your bases and ensure your software works as intended.

    Test the data in your new system to ensure the software functions as intended. Start by comparing your chart of accounts, trial balance, and other financial reports in your old and new accounting systems. Keep an eye out for discrepancies between them. If you find any, you’ll need to determine the root of the problem and fix it.

    Run tests in the new system as well so you know how the platform works with your data (versus the data available in a demo or free trial). Use the software normally—run reports, send test invoices, or organize your expenses to make sure the system works as it should. After all, you wouldn’t want to find out a feature is misfiring when you need it most.

    7. Run Both Systems in Parallel—Just in Case

    Even though your new accounting system looks fine and dandy by this step, it’s best not to shut down your old software system just yet. Keep both running simultaneously until you’re sure the new software can run independently.

    The length of time will depend on your business and the complexity of your accounting system but expect this to take between a week to a quarter or longer.

    Once you feel confident in your new system and have ironed out any kinks, begin training your team to use the platform. This is arguably the most crucial part of the process, as all your hard work will be for nothing if no one else at your company is able to use the software.

    Take advantage of any resources your software provider might offer in this regard. Many companies offer webinars, phone support, or one-on-one training opportunities to teach your team everything they need to know to succeed with the platform.

    Consider creating procedures and checklists for your team to follow as well. This reduces costly mistakes that can impact your business reports and other aspects of your accounting software.

    When all of this is done, you’re now ready to close your old accounting system for good. Congratulations!

    8 Questions to Consider When Choosing Your Accounting Software

    With so many accounting platforms available today, it’s easy to get overwhelmed if you don’t know what you’re looking for. Get clear on the features you need most from your small business accounting software by thinking about the 8 questions below. Use your answers to guide your selection process.

    For more information on choosing the right accounting software for your business, download this handy checklist.

    1. What Accounting Features Do You Need?

    Features such as chart of accounts reports and bank reconciliation will still remain top of the list for many small business owners. But why stop at the essentials when many software providers go above and beyond in their functionalities?

    Service-based businesses, for instance, may seek features like customizable invoices, late payment fees, and automated payment reminders that ensure easier payment for their services. Automation tools such as these are particularly useful, as 78% of accounting and finance professionals in a recent Airbase survey say that automation positively impacts business growth.

    Meanwhile, businesses of all sizes and structures will see value in features like expense tracking and tax-time reports that make tax preparation and filing easier.

    A 2019 OnPay survey found that 41% of small business owners and managers handle accounting and finance themselves, while another 28% report that they have been audited or received a notice from the IRS. Managing finances can be complicated for small business owners who wear multiple hats, and any mistakes can result in costly and time-consuming audits. Choosing accounting software designed to make filing your taxes easier can prevent this.

    2. Does It Integrate With the Apps You Use to Run Your Business?

    Despite its importance, your accounting software is just one part of the technology network that helps you run your business. The most useful or powerful application will still fall short if it can’t connect with the rest of your tech stack.

    So, in addition to checking your software options against your desired list of features, check whether they integrate with your existing platforms.

    3. Can You Give Your Accountant and Team Members Access?

    If you plan on handing off some or all of your business’ financial tasks to your team or accountant, look for accounting software with multi-user access.

    This feature controls who gets access to different parts of your account. So if you want your accountant to get full access to your financial data, you can easily grant them the proper access, while employees who only need to use certain features, like time tracking, will only see that option on their end.

    If you work closely with your accountant, you may also want to give greater weight to their software recommendations. Choosing a platform they’re already familiar with ensures they spend less time learning the intricacies of new software and more time working on your books.

    4. Can It Grow With Your Business?

    Growth-minded business owners will also want to look for accounting software that scales with their organization. Look for tiered plans, customizable software packages for an additional fee, plus full-suite features like project estimates and time-tracking that allow you to do more with fewer resources.

    Think about where you want your business to be a year or 5 years from now, and look for features that support the kind of company you expect to have then.

    5. Can You Get Help When You Need It?

    Customer support is essential, especially for something as vital to your business as accounting software. It becomes even more so if you lack business finance expertise—or if you plan to transition from an old system to a new one.

    So as you do your research into the best accounting software for your business, take note of each provider’s customer support efforts as well. Some questions to think about include the following:

    • What channels of communication are available to you?
    • What are the support team’s hours of operation?
    • How long can you expect to wait before you get a response?

    In addition to customer support, look for whether your provider offers additional resources—such as blog posts, FAQs, and tutorial videos—to quickly answer any common questions you have.

    6. Can You Easily Migrate Your Current Data?

    As you saw earlier, migrating existing financial data to a new accounting platform is generally not a quick process. The more data you have, the longer it’s likely to take.

    So if you’re a business owner with many years’ worth of transactional data under your belt, you may decide to prioritize accounting software providers offering features or services that make this transition easier for you.

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    7. Can You Test It Out Before You Commit?

    Are there free trials you can sign up for? Or a demo you can book? Most software companies make it easy for prospective customers to find this information on their website and sign up, so it’s simple to test each option on your shortlist (ideally one at a time) before you make your decision.

    Don’t just play around with the features that catch your eye, either. Try to use the platform the way you would in real life. Set up recurring invoices and other automations to see how much time you’d save. Create customized financial reports. You may even find it helpful to assess the responsiveness of the customer support team by reaching out with a few questions.

    8. Is Now the Time to Switch Accounting Software Platforms?

    Most companies will want to time their switch to a new accounting platform with the start of a new year or a new fiscal year. This is because, by this time, your finance team has already gathered and organized your business’ financial data for the year—making it simple to transfer the information in a lump sum all at once.

    But if your business is busy during this time of the year, you may want to time your move for the slow season—whenever that may be. Check your staff schedules to see when your finance team will be available to help with some of the heavy lifting.

    After all, the amount of work required for a successful transition makes it difficult to do alongside any other large projects (and that’s not counting the amount of time you and your team will need to learn how to use the platform itself).

    Switching Accounting Software: A Valuable Investment in Your Business

    Done correctly, the process business owners must follow to switch accounting systems is an investment of time and effort that pays off in the long run. Start by choosing the right software for your business needs, then methodically transfer your financial information from your old system to the new one.

    By coming prepared with the necessary information above and giving yourself enough time to go through each step, you might even find that changing accounting software is a relatively simple undertaking. Of course, if you have any software transition questions specific to your business’ unique needs, get in touch with an accounting professional first.

    Kick off your search for new accounting software by giving FreshBooks a test run. Sign up here to start your 30-day free trial today.

    Feli Oliveros

    Written by Feli Oliveros, Freelance Contributor

    Posted on October 17, 2022