Your Implementation Team Leader will develop a custom timeline with consideration for the overall scope of the project. This document focuses on the accounting transition between systems. Please refer to the Accounting Training Overview provided by your DDI Accounting System Consultant for descriptions of the training included with your project.
This guide is divided into four phases:
- Phase 1 Discovery: determination of financial structure and chart of accounts
- Phase 2 Pre-Implementation: focus on General Ledger and Financial training
- Phase 3 Go-Live: verification of system performance and continued training
- Phase 4 Post Go-Live: training on End of Month Close, Bank Reconciliation, Inventory Reconciliation
DDI’s first accounting meeting will focus on setting up a functional and relevant financial reporting structure. We strive to provide a realistic operating environment in the first accounting training. This ability is contingent upon receipt of a Chart of Accounts and financial statement samples.
General Ledger Accounts are structured as follows:
The Account Number, also known as the Root, identifies a unique financial item. Multi-branch organizations can expand the Chart of Accounts by adding Suffixes to identify each location.
For single location companies, the Chart of Accounts will not need to be expanded because the Balance Sheet and Income Statement are consolidated by default.
- Consolidated Balance Sheet and Income Statement – activity in all branches is consolidated into a single G/L account for each item For instance, Sales would be the sum of sales in each location and be numbered 4000-00-00. In this case the Chart of Accounts would contain one account number for each G/L account. It is very unlikely that a multi-location company will use this option.
For multi location companies, there are 4 options for the structure of the Chart of Accounts, depending on the level of separation on financial statements.
- Consolidated Balance Sheet and Income Statement with separation of Sales, Cost of Sales and Inventory – activity is consolidated for all branches except for Inventory Value, Sales Revenue and Cost of Goods Sold. This is an ideal option for organizations without the need to separate expenses.
- Consolidated Balance Sheet and Split Income Statement – activity in all branches is consolidated on the Balance Sheet, but split by location on the Income Statement. Accomplishing this requires the use of branch G/L suffixes to create a copy of each G/L account with a suffix unique to the branch. For example, the Sales G/L account would be numbered 4000-01-00 for Branch #1; 4000-02-00 for Branch #2 and so on. This structure is most common for multi –location organizations operating under a single Tax ID Number.
- Split Balance Sheet and Income Statement – activity is completely split by branch for all accounts. This structure is most common for organizations with different Tax ID Numbers operating as branches on the Inform software. If there are a large number of branches, this option can result in a lengthy Chart of Accounts.
- Separate database for each company – this structure indicates that each company will be operated completely independently from a systematic standpoint. If you intend to use the same Chart of Accounts, considerable care must be taken to manage changes and additions in each database. Transfers of merchandise, purchases and sales between companies will require handling through customer and vendor relationships. Please note that there may be additional setup charges associated with establishing a separate database.
It is critical that your Chart of Accounts and Financial Reporting structure are reviewed prior to the initial data conversion.
- Eliminate duplicate or unused G/L accounts.
- Follow proper protocol for numbering, naming and ordering accounts.
- Verify that the accounts follow the correct order and placement on Financial Statements.
- Fix misspellings, incorrect account names and upper/lower case inconsistencies.
- Accounts that have no history and will never be used should be removed before the final conversion to eliminate the possibility that a transaction will accidentally post there. Once a G/L account has history in Inform, it cannot be deleted.
- Account titles should be cleaned up so that they convert in proper fashion.
- If you want to restructure your Chart of Accounts, it must occur before conversion. This process will require cross-reference from “old” accounts to “new” accounts when the opening balances are transferred between systems.
- Validating individual balances should begin several weeks before conversion to Inform.
|Good Data||Poor Data|
|1000-00-00 Cash – Chase Operating Account||
|1010-00-00 Cash – Chase Money Market Account||1050-00-00 Money MARKET cash|
|1020-00-00 Cash – Chase Savings Account||
1266-99-99 savings account
|1030-00-00 Petty Cash||
1500-00-06 Petty Cash
For DDI to create a relevant training environment, please provide a complete and audited Chart of Accounts listing, as well as samples of your existing financial reports. This material will enable us to define your G/L accounts in accordance with your current structure.
Continuing to enter data into your previous system after this cutoff will result in data missing from DDI and beginning balances that don’t agree to prior system ending balances.
- Accounts Receivable – open customer balances will be converted. The final Accounts Receivable Aging on your old system will provide an accurate starting balance for the A/R G/L number. Open sales orders will NOT be converted and will need to be reentered after go-live. Consider deleting inactive accounts and writing off uncollectable balances.
- Inventory – item quantities, costs and value will be converted. Units of Measure must be accurate and consistent. Focus on eliminating redundant units of measure to avoid future valuation issues. The final Inventory Valuation on your prior system will provide an accurate opening balance for the Inventory G/L number. Consider deleting “obsolete” items if they have had no movement for more than 5 years.
- Accounts Payable – open vendor balances will be converted. The final Accounts Payable Aging on your old system will provide an accurate opening balance for the A/P G/L number. Open purchase orders will NOT be converted and will need to be recreated after go-live. Consider deleting inactive vendors and voiding stale checks.
- Bank Reconciliation – the go-live month will be separated into 2 complete reconciliations, unless system cutoff occurs on the last day of the month. The first reconciliation will cover the period up to the last day on your current system. This final bank reconciliation will provide an accurate starting balance for the Operating Cash G/L value in Inform.
Inform will open with zero balances in every G/L account. A determination must be made as to how these balances will be entered into Inform. DDi will convert monthly balances if the information is provided in Excel format, with old and new account numbers.
- Closing Balances – This option brings over the ending balance at cutoff of each G/L account. It will not provide monthly or prior year detail. A single Trial Balance will provide the necessary data.
- Monthly Balances for Current Year – This option brings over end of month balances for each current year accounting period. It requires a series of end of month Trial Balances to calculate the change in balance between periods.
- Monthly Balances for Full Year – This option brings over end of month balances for the previous year and will facilitate immediate prior year comparisons on current year financials. Like the option above, it requires a series of Trial Balances to determine monthly changes.
The ending G/L balances from your prior system will be converted as Inform’s opening balances. Prior to providing this information to DDI, consideration must be given to reconciling the G/L balances to their sub-ledger detail for the following items:
- Bank Cash On Hand – The final bank reconciliation should result in a Reconciled Book Balance that agrees to the corresponding G/L balance. If your Go-Live occurs in the middles of a month, you may need to perform a bank reconciliation as of the final posting date in your prior system to ensure that all entries have been entered prior to conversion.
- Inventory – The value of inventory on hand should be accurately represented in the G/L account. If there are any un-invoiced merchandise items received in your prior system, but not yet billed by the vendor, the G/L balance will lag behind the Go-Live Inventory Value at the time of conversion.
- Accounts Receivable – The balance in the A/R G/L account should exactly equal the Go-Live A/R Aging, a listing of what is owed from customers at a point in time.
- Accounts Payable – The balance in the A/P G/L account should exactly equal the Go-Live A/P Aging, a listing of what is owed to vendors at a point in time.
The following conversion reports will be stored on your DDI Server. Please do not alter or move them. These conversion item values require approval before the DDI team leaves your site.
- The Accounts Receivable Aging Report is a listing of amounts owed to the business, broken down by customer and aging bucket. The balances on this report reflect individual customer account balances. Your final Aging must agree to the DDI A/R Aging Report.
- The Accounts Payable Aging Report is a listing of amounts owed from the business, broken down by vendor and aging buckets. The balances on this report reflect individual vendor account balances. Your final Aging must agree to the DDI A/P Aging Report. If all vendors were paid before conversion, the report balance will be zero.
- The Inventory Value Report is a listing of item values. Each item’s on hand value is calculated by multiplying the on hand quantity with the current cost. Items missing a cost or items with negative quantities will skew the overall report results. Your final Inventory Valuation must agree to the DDI Inventory Value Report.
Verify that your Chart of Accounts has been converted in accordance with the information provided to DDI. This will ensure that transactions book to the correct accounts immediately after Go-Live.
- Go to Accounting > General Ledger > G/L Account and click the Report button.
- The system will return a printable, downloadable, and exportable list of all accounts.
- Alternatively, go to Accounting > General Ledger > G/L Inquiry & Financial Reporting to search, sort and drill down to the chart of accounts.
- Enter the period (MMYY) or the fiscal year (YY) and click the Search button to populate the screen.
- Output is available on screen, paper, fax, e-mail, pdf or csv or formatted Excel.
This step is only required if DDI is not converting your opening data. If financial report samples are provided to DDI at least 2 weeks ahead of Go-Live, your accounts will be grouped as part of your data conversion. This action determines where the account value will be categorized on the Financial Statements and how the calculations will arrive at Net Income for the period. Inform contains several standard groups which are pre-mapped to the financials. It’s a good idea to start with the groups provided because they are already built in to the standard financial reports.
If you prefer, accounts may be grouped manually at any time after Go-Live.
Go to Accounting > General Ledger > G/L Group and choose a group. Click the Edit button to add accounts to the group. When finished, click Save.
- Balance Sheet accounts must be saved in one group (Current Assets, Current Liabilities, etc.)
- Income Statement accounts must be placed in one group (Revenue, Cost of Sales, Operating Expense, etc.) plus the Income Summary Group.
- An account may live in more than one category group, but keep in mind that duplicate inclusion will skew the results on a report if both groups are present in the settings.
- If you want to show Percent of Revenue on the Income Statement, make sure all Revenue groups are indicated as such by checking off the Revenue Group box.
For an optimal conversion, please provide opening G/L account balances by the end of your go-live month. Review the section entitled “Pre-Implementation B” for details on how to provide these balances.
If you prefer to make the opening entry yourself, follow these steps:
- Go to Accounting > General Ledger > Journal Entry and select type Regular.
- Allow the system to assign a journal entry number by clicking the Next button.
- Excel data may be copied and pasted directly into the first account number field by right-clicking and choosing paste. The excel data must be arranged as follows: Account number, debit amount, credit amount. Please refer to Getting Started with the General Ledger for more information.
- As soon as it’s saved, a journal entry is “live” and posted.
- Verify your work by producing a Trial Balance, a listing of G/L account balances at a point in time, usually the last day of an accounting period.
- Go to Accounting > General Ledger > G/L Inquiry to produce a Trial Balance.
- Enter an accounting period and click Search to populate the screen.
- Click Trial Balance to view, print or export the report.
- Compare the Net income or Loss to your records.
The Calendar Period (MM/YY) determines which month the journal entry will affect.
The Transaction Date (MM/DD/YYYY) serves as a labeler for cross-reference purposes and should be assigned in accordance with the accounting period.
Your first month end close will be assisted by a DDI Accounting Team member via an interactive support session. Refer to the document entitled Month End Closing Process for more information.
- Before closing:
- Ensure that all daily processes are complete before the close.
- Restrict users from updating the system while the closing is occurring.
- During closing:
- Apply finance charges and produce customer statements, if applicable.
- Capture Accounts Receivable, Accounts Payable and Inventory reports. Content is automatically captured in detailed Excel format (.xlsx) and stored on the server.
- Cut off Accounts Receivable and Accounts Payable from further transactional posting into the period.
- After closing:
- Produce Sales Tax Summary and other monthly journals as needed.
- Reconcile A/R and A/P detail against their corresponding G/L account balances.
- Reconcile bank statement and cash G/L account.
- Reconcile Inventory for all branches and warehouses.
- Go to Accounting > General Ledger > G/L Inquiry & Financial Reports
- Use the Search Icon to choose “BALANCE SHEET” or “INCOME STATEMENT,” enter the accounting period (MM/YY) and click OK.
- Check that there are no excluded G/L accounts from financial reports. This will become evident because the system will display an Exceptions Tab if there are missing accounts. The only time accounts should be excluded is if they are anticipated to have no transactions or balance.
The Trial Balance should serve as your absolute source of financial information because it picks up all G/L activity without any grouping or other special setup required. It is available for one accounting period at a time.
What to check on the Balance Sheet:
- Current Assets, Fixed Assets, Current Liabilities, Long Term Liabilities and Owner’s Equity are ordered accordingly.
- The sum of Assets is equal to the sum of Liabilities and Owners’ Equity.
- The Year to Date Income is equal to that shown on the Income Statement.
What to check on the Income Statement:
- Revenue, Cost of Sales, Operating Expenses, SG&A Expenses, Other Expense and Other Income are ordered accordingly.
- Gross Profit is equal to Revenue minus Cost of Sales.
- Net Income is equal to Gross Profit minus all Expenses.
- Net Income transferred to the Balance Sheet correctly. Year to Date Net Income must match on both reports.
Keep in mind:
- Providing financial report samples prior to Pre-Implementation (also known as the “Train the Trainer” phase) will expedite DDI’s conversion of your information.
- Financial reports are based on G/L account groupings and classifications. There is a large amount of customization available, which can take place at any future time without affecting account balances or existing transactions.
- DDI’s mission is to provide a basic set of reports during the Go-Live month, with the ability to refine with further scheduled training.