Transitioning to a new Enterprise Resource Planning (ERP) system can be a transformative experience for your local government agency. It can create efficiencies that most times were thought not possible. New accounting rules seem to be coming out of the woodwork that changes how our systems from 20 years ago were implemented to be used. In turn, most processes that used to add efficiencies continue to be a burden for the current team. How many times have you heard “our current system cannot do that, but we can do it in Excel?” To ensure a smooth implementation, it’s crucial to prepare your accounting data in the general ledger. Clean and accurate data is essential for the successful launch of your new ERP system. Just think, if you transfer good data into your new ERP system, you’ll have a solid starting point…..but if you transfer bad data, you’ll start out with data that is unreliable and needs cleaned up.
Below is a roadmap of some of the most important steps for scrubbing your accounting records in preparation for your ERP implementation.
Reconcile Accounts
Unreconciled accounts can lead to inaccurate balances being brought into the new ERP system. Reconcile all asset and liability accounts before migrating data to the new system and review and reconcile all other subledgers to the general ledger. This includes any accounts receivable, utility billing, project management, grants management and capital assets subledgers that will also be included in the implementation. This step would be similar to your year-end close process since you are reviewing and reconciling the amounts to ensure the account balances are correct.
Identify and Eliminate Duplicates
Duplicate entries can skew your financial data and cause integration issues with the new ERP system. If you implement in the middle of a fiscal year, make sure all reversing entries have been posted from the prior year accruals as well.
Standardize Chart of Accounts
Implementing a new ERP system provides the perfect opportunity to review your existing chart of accounts (COA) and determine if the structure still works for your operations today. An inconsistent COA can lead to errors and reporting problems and makes training new employees harder than it needs to be. A well designed COA has a thought out fund structure, an account structure that is organized, and consistent account names, descriptions, and numbering across all funds. A good starting point would be think about how the COA was originally created in your current system. Have departments changed? Does the current design make sense make sense? If your General Fund is Fund 100, your Water Enterprise Fund is 200 and your Special Revenue Fund is 300, you may want to consider moving your enterprise funds later in the numbering schema so all of your governmental funds are in sequential order by fund type. This also allows you to create consistency between the categories between your budget document and your financial statements.
Once you have a grasp on the new COA, detail it with a “crosswalk”. A crosswalk is a comparison of the old COA versus the new COA and will help your implementation team know where balances in existing accounts will sit in the new system, allowing you to still see historical balances, just in their new account numbers. A well-documented crosswalk would benefit everyone in the organization and will often be used by other parties, including your auditors.
Review and Purge Inactive Records
Inactive accounts, customers, or vendors clutter your data and slow down processing. Review these records and purge any information that is no longer relevant. Are there duplicate customers set up and your cashier has to make sure they post the cash receipt to the correct one? Flag these and talk to your implementation consultant about these in advance. Each system handles these differently but most won’t require multiple customers to be created.
Scrub Current Records
This is also a good opportunity to scrub the data that is current but update it. If time is permitted, send out a fresh Form W-9’s to get the newest and greatest information from vendors, so information is migrated correctly and accurately. Its also a great time to launch an ACH Payment campaign so you can utilize the most efficient features of your system.
By following these comprehensive steps, you can ensure your accounting records are clean and ready for migration to your new ERP system. This will minimize implementation challenges, optimize the functionality of your new ERP, and ultimately contribute to the successful ERP launch. Remember, clean data is the foundation for informed decision-making and robust financial reporting. Taking the time to clean up your account records now will pay hugely in the long run.
Do not hesitate to contact LSL today for help!
