Where were you in 1965? Some of you were in school, whether elementary, middle, or high. Others will remember those being the fun and adventurous college days. To those celebrating a 50th birthday this year, you were busy arriving to this world in 1965. And to some, that year you were just a sparkle in your parents’ lives.
To one of our clients, that year was the beginning of its existence. And to their credit, they have electronic accounting records dating back to then. Yes, electronic records. Before you think I am making this up, their current accounting system does not date back to 1965 — no, they are not running a computer that occupies an entire room and requires special raised floors for cooling… However, they were diligent in their accounting life to bring over or reproduce their historical detail every time they had a change in accounting systems.
Recently the client came to us because they intend to change from a proprietary custom accounting solution to QuickBooks Enterprise. “No problem,” we said. “we do conversions of any kind all the time.” Little did we know that their requirement would be to bring over half a century of accounting data. Yes, you read right. This is the fifty year conversion.
To bring context to this, let’s define the options of an accounting system conversion. You can convert (1) detail transaction history from the previous system even if for the most recent years, or simply (2) start only with beginning balances. Some take the hybrid approach of a beginning-balance-only conversion but (3) add historical monthly trial balances, in order to provide comparative financials going back as far as desired. All good options depending on the situation. In any data conversion project, we always perform an analysis or consultation to advise the client of their best course of action.
Now, let’s dissect the components of an accounting system conversion, looking at the 3 options above. In a conversion where all is needed are beginning balances, we just have to concentrate on open Customer Invoices (IE, open Accounts Receivable), open Vendor Bills (IE, open Accounts Payable), beginning inventory quantity and values (preferably from a physical count) and the rest of the General Ledger balances as of the start date. Incidentally, “start date” is a technical term for us when doing a QuickBooks conversion. “Start date” is the date from which detail transactions begin. In the interest of brevity and staying on topic, we are not going to go into the detail on the topic of “start date” (that might be a good topic for a future article).
Without a doubt, a beginning-balance conversion is the simplest and should be the least costly kind. There is more detail than the simple explanation in the preceding section, but again in the interest of brevity, I prefer to go on to the next form of conversion: detail transaction history.
In a historical transaction conversion, we may be confronted with data coming from another system that is in complete disarray. Even if in good accounting shape, it may be available only in formats that are not easily translatable to how QuickBooks prefers to have data imported. That is usually the main challenge in complexity and time + cost.
I wish to bring to light another matter in the topic of historical transaction conversions: how much history to bring in? In the client example here, their intention was to include into QuickBooks all transactions since 1965. Let alone whether or how we can convert the custom application format into a QuickBooks readable form — but what impact would fifty years’ worth of transactions could have on a QuickBooks data file? Besides the sheer transaction volume, even if transaction volume was not that dramatic, just potentially running multi-year reports that could span fifty years is not very common in QuickBooks. In fact, it would bog down the report engine every time you run any such multi-year report. More important than the technical work itself, the consultation about the conversion became the critical component of the project. We ask, “Do you really need fifty years of transactions in your working QuickBooks file?” Realize what you are doing to the starting size of the new QuickBooks data file; why begin a fresh new data file with a truckload of data that will, on the most part, be unused. If the former system is going away – due to licensing or hardware reasons – why not simply grab those fifty years of transactions and store them in a separate database to be used for reference, something like Microsoft SQL or even Microsoft Access? We have had clients store a historical transaction library in something as simple as Excel. No need to tax a fresh new QuickBooks data file with all that weight. Our recommendation is to start with beginning balances or with the least number of historical years. Also do not forget that we can bring in monthly trial balances for the historical periods desired – although again, that could put a strain on large multi-year reporting.
Incidentally, it is this last part of the project that excites us the most – analyzing the entire company situation and advising on the alternatives courses of action and recommending the best based on expected results of each of those actions. We enjoy this the most because it is the most rewarding – seeing a happy client reap the rewards of the best possible solution. Many times that solution is a vast departure from what they wanted at the inception. And that is at the heart of systems consulting, I am pleased to admit.
I look forward to the production of “The 100-Year Conversion”… We will be speaking with Fox Film Corporation (you might have heard of its successor, 20th Century Fox), Sony Pictures Studios, or even Universal Studios Hollywood – not only can each of them produce the film, but each can be the subject of the film, as they all were founded in 1915! Or perhaps we can keep it closer to home and approach Bealls department stores, based in Florida, and also founded in 1915. Hefty aspirations, perhaps… But we will report the success from the 50-year conversion soon.