Limitations when converting to Xero

Please understand that it is impossible to make an exact copy of your data in a different accounting system. There will be some information that we can’t convert and some information will look different when converted. You can be confident, however, that your financial data will be accurate overall.


TABLE OF CONTENTS


Foreign Currency

We mention foreign currency in our limitations pages so this page will provide further details on how we approach foreign currency conversions. This page includes information relevant for conversions to all destination systems.


Important information

From QuickBooks (Desktop or Online) and Freeagent


Factors specific to QuickBooks (Desktop and Online) and FreeAgent mean that conversions where foreign currency is detected or those containing non-home currency transactions from these systems are unlikely to complete accurately.


We will not investigate or fix any aspect of these conversions, even if seemingly unrelated to foreign currency.


The only options regarding unsuccessful foreign currency conversions from QuickBooks (Desktop or Online) or FreeAgent, will be to accept them complete with differences, or abandon the conversion. We do not recommend reconverting a second time as this is likely to give the same results.


From Sage, KashFlow or Xero

We will do our best to investigate and resolve any differences with these conversions although this isn’t always possible.


For more information see the foreign currency page.


General

Causes of Complications

We never know exactly what the results of a conversion will be ahead of performing it. The information below is a guide for things that are likely to cause complications. Whether these complications will cause differences, unusual looking transactions, or prevent the conversion from completing we can’t yet say but it’s best to be aware of them in advance.


Volumes

Please be aware that it may cause complications (we’re unable to fix) with your conversion if your source software contains in excess of any of the following in the conversion period:

40,000 combined invoices, bills and credits

40,000 bank transactions

2,500 credit notes allocated to invoices

10,000 contacts

600 chart of account codes

100 or more departments/classes


Converting from QuickBooks

If you’re converting from QuickBooks Online and recharge transactions, then not all line items may be included when converting.


QuickBooks and QuickBooks Online allow for bills to be paid from suppliers other than those named on the bill itself. When converting to other systems, this is not supported and will result in differences we’re unable to fix.


Also note that due to a limitation with QuickBooks Online, transactions using a Product/Service Stock Asset may not be converted with the correct account code.


Converting from Sage

If there are journals manually entered in Sage Desktop that have the same “Ledger year end” description as the system journals, we aren’t able to convert these. Differences will be displayed once the conversion is completed and you may complete the Fix It For Me form but adjusting for these isn’t included in our service unless extremely simple.


If payment providers such as Stripe are used in Sage Business Cloud Accounting there may be differences caused by Sage reporting Payouts to us as transactions although they may not have been recorded in the accounts.


Converting from FreeAgent

Corporation Tax

FreeAgent automatically creates entries for corporation tax that aren’t provided to us by FreeAgent. We’re investigating options to improve this but currently corporation tax is unlikely to be converted correctly.


Smart User Payments

If smart user payments are used, FreeAgent, doesn’t provide us with the split between the salary, expense and dividend. This is likely to result in differences in the conversion that we’re not able to resolve.


For more information, please see FreeAgent’s smart user payment blog. 


Flat Rate or non-VAT/tax registered

FreeAgent allows tax transactions to be entered in non-tax registered companies. It also posts the gross transaction value to P&L accounts for purchase transactions with tax under the flat rate scheme.


In both scenarios, while FreeAgent correctly ignores the tax for accounting purposes, the information provided to us from FreeAgent does not. This means we’re unable to accurately convert the journals.


These transactions will be recognised by our system as taxable transactions and the tax will be posted to the tax account. This will cause differences that we’re not able to resolve.


Stock

When selling stock items in FreeAgent, the cost price is calculated by FreeAgent using the FIFO (first-in first-out) principle. This calculated cost is then adjusted for in the balance sheet and Profit and Loss. FreeAgent does not provide us with details of the adjustment. As a result, stock is unlikely to be correct in the destination system.


For more information, please see FreeAgent’s blog on stock valuation.


Foreign Currency

Factors specific to FreeAgent mean that conversions where foreign currency is detected or those containing non-home currency transactions are unlikely to complete accurately.


We will not investigate or fix any aspect of these conversions, even if seemingly unrelated to foreign currency.


The only options regarding unsuccessful foreign currency conversions from FreeAgent will be to accept them complete with differences, or abandon the conversion. We do not recommend reconverting a second time as this is likely to give the same results.


FreeAgent Trial Balance report

The Trial Balance in FreeAgent doesn’t include previous financial years (unless the report dates are set to include all previous years). This includes the Balance Sheet accounts.


When comparing FreeAgent Balance Sheet accounts to your destination software, set the FreeAgent Trial Balance report to include all dates. When comaring the Profit & Loss report do not select to include previous financial years. 


Data converted via transactional view

In FreeAgent, the same transactions can display with different dates or tax rates in the transactional view compared to the report view.


Data will be converted per the FreeAgent transactional view and not the report view. This “transactional view” data is the only data available to us.


As a result of this, your account balances may be different when comparing between FreeAgent and your destination software.


Capital Asset Handling

FreeAgent uses different accounts for the Capital Asset, additions, disposals, and depreciation. At the end of an accounting year, FreeAgent then ‘rolls up’ these sub-accounts into its parent. It does this “behind the scenes”, without any transaction for us to replicate. This will result in the Capital Asset accounts being correct, but may show different balances. 


This can be checked by summing a single Capital Asset account and sub-accounts in FreeAgent and your destination software. The balances should be the same.  

 

For more information, please see FreeAgent’s blog on handling capital assets


Dividend accounts

At the end of your financial year FreeAgent transfers the balance on the dividend accounts to the Profit and Loss account. It does this “behind the scenes”, without any transaction for us to replicate. This may result in dividend accounts showing different balances to the source system.


Non-VAT Enabled Source 

If you are non-VAT enabled in FreeAgent, you are still able to enter VAT  transactions. If you are non-VAT enabled and have entered VAT on transactions, your destination company will need to be VAT enabled and we will bring across the VAT on the transactions and post them to the VAT account.


General

If CIS is operated then the conversion is unlikely to be successful. This is because the CIS details are often provide to us incorrectly by the source system.


If you’re using a 0% reverse charge tax rate, then we’re unable to convert this tax rate to Xero, so associated transactions will be incorrect. This tax rate can be manually added to Xero and the relevant transactions amended, but we aren’t able to provide this service for you.


What data will be converted?


We will transfer the following data to Xero:


Customer Details

Supplier Details

Chart of accounts

Account balances

Customer balances

Supplier balances

All individual transactions in the conversion period

Best attempts will be made for matching fields between software systems when converting to Xero. Some fields will not be converted eg. Sage Supplier and Customer Bank Account Names where Xero’s API does not provide the means to do so.


It’s not possible for Movemybooks to provide custom mappings for any fields or the chart of accounts.




What data won't be converted?


We only currently convert the core accounting information and not the following types of data:


Sage archives or backup data that isn’t “open” or “live”

Sage Departments tracking for opening (conversion) balances

Sage Cloud (SageOne) Analysis Types (equivalent of departments)

Budgets

Project data/Job Costing

Stock or inventory invoice lines or stock amounts*

Product/Service/Sales Items*

Sub-account structure of the chart of accounts (Xero has no sub-accounts)

Accounts that have never had any transactions

Deleted or cancelled transactions

Fixed Asset Registers

Sales and Purchase Orders

Quotes/Estimates/Draft/Unposted invoices or bills

Bank statements

Memorised Transactions

Default nominal codes, payment terms or tax rates

Custom tax rates (see workarounds used)

Filed tax returns (tax transactions are converted not returns)

Tax journals made to non-system accounts

Templates such as invoice templates

Timesheets/Time Records

Payroll and Employee Records*

Transactions after the “Convert To” date

Nil value invoice line items

File attachments (optional extra on certain conversions)

CIS details (transactions are also unlikely to convert correctly)*

Unpaid expense claims

Charity fund codes

Custom fields (invoices/bill/contacts)

If the option to convert departments is not displaying on the Conversion Setup page then no department data (or equivalent) will be transferred.


*Associated transactions will be converted ie. for a stock item, the purchase would be converted but no stock will be present on the transaction



Workarounds

Transaction types we can't convert

There are certain transaction types that Xero does not allow us to convert. We try to create transactions in Xero that match as closely as possible the transaction in the original software, although sometimes we have to use a different transaction type. This can result in invoices/bills showing as unpaid in Xero where the original transaction was paid.


Bank and Credit Card Accounts

Credit card charge transactions are converted as transaction type “Cheque”.


Credit Card accounts can only be converted as Xero Bank Accounts. Credit card bank feeds may not be available on bank accounts. Following the conversion, balances can be transferred to credit card accounts where feeds are available.


VAT/Tax


Some tax/VAT transactions including those with custom tax rates, EC VAT, reverse charges or unusual tax transactions will be converted as closely as possible but are likely to be different. We may use a standard rate of tax or No Tax and then add an adjustment to correct the tax amount if necessary. This could result in some boxes in tax/VAT Returns being incorrect even if the Balance Sheet amount to be paid or refunded is correct.


System tax accounts are merged to become a single tax account as required by Xero.


For more information, please refer to our post-conversion tasks page and also the Tax Returns Don’t Agree page.


Depending on the system you’re converting from and the transactions present, the conversion may result in some rounding differences due to the way tax or line amount totals are calculated differently between systems.


FreeAgent allows non-tax registered companies to enter bank payments with tax. These will be converted with tax.


For conversions from FreeAgent, we apply the current tax registration status of the company to all transactions. If the company has become tax registered in the conversion period, this is likely to cause differences.


Accounts Receivable and Payable

If you have multiple Accounts Receivable or Accounts Payable accounts in your QuickBooks chart of accounts then these will be merged into one single Accounts Receivable and Accounts Payable account in Xero.


If you’re converting from Sage and “Batch invoice” was used to enter invoices, each line will be converted as a separate invoice (irrespective of the reference) as Sage stores the data this way.


No Name Transactions

Some source systems allow transactions to be entered without contact details that are required for the same transaction in Xero. In these instances we create and use a “No Name” contact in Xero. 


Rounding / Decimal Places

Xero defaults to rounding up. This may be different to the software system you’re converting from. If the sum of a line in Xero is calculated differently to that in the source then the quantity and unit amount will be dropped from Xero and only the line total will be converted.


As above, transactions with unit amounts to more than two decimal places will be entered as the line item total.


Payroll

Payroll and employee records are mentioned in the “What data won’t be converted?” as information we can’t convert. We do try our best to convert the accounting transactions although this isn’t always possible.


If converting from FreeAgent and the Employment Allowance is claimed then associated adjustments or transactions are likely to be aggregated into E’ers NIC. The overall balance in relation to payroll will be correct, but individual payroll and NIC accounts may not be correct.




Things you may need to tidy post-conversion

Reconciling Bank Transactions


We try our best to convert the bank reconciled status of transactions but this is not always possible. Xero prevents us from marking some transactions as reconciled eg. overpayments, prepayments and bank transfers  so you will probably need to manually complete this so that the “Statement Balance” in Xero is correct.


Remember, there are potentially two balances shown on the Dashboard for each bank account – the “Balance in Xero” is the Balance Sheet balance from your old system. The “Statement” balance is the total of transactions marked as reconciled in Xero.


To tidy your bank reconciliations click on the three dots menu button then Account Transactions


You now want to make sure that you enable the Mark as reconciled function via the help menu


We also recommend that, if you have a large number of transactions to mark as reconciled, you switch the page view to show 200 items. This will allow you to tick the top checkbox in the left column and mark transactions in blocks of 200 if you wish.


All you need to do now is mark the transactions you want to change to reconciled and click select Mark as Reconciled from the More button.


If your bank balance was fully reconciled in your desktop software, you will want to mark all transactions as reconciled. Then your “Balance in Xero” and “Statement Balance” will be the same.


If your account was not fully reconciled in your desktop software, you will want to leave the unreconciled items as remaining unreconciled. Then your “Statement Balance” will be the same as the statement or cleared balance in your desktop software. 


It’s important you don’t connect bank feeds or manually import any bank statement data for your conversion period. The steps above will correct your Statement Balance and the reconciled status of transactions in your conversion period. If you’ve already imported bank statement data for the conversion period or do so in the future this is likely to adversley affect your data and cause duplicate transactions.



It’s important you don’t connect bank feeds or manually import any bank statement data for your conversion period. The steps above will correct your Statement Balance and the reconciled status of transactions in your conversion period. If you’ve already imported bank statement data for the conversion period or do so in the future this is likely to adversley affect your data and cause duplicate transactions.




Check the VAT/Tax codes in chart of account items


If you set default VAT/tax codes in the chart of accounts or on contacts etc. then we likely won’t have converted these. You may wish to amend the individual contacts or chart of accounts to indicate your preferred default tax rate.


Xero Central has more information on the default tax rates:

How your default tax rate and account settings work


Filing VAT/tax returns


We do not set your VAT/tax number and return periods although we do convert your tax transactions. This is something that you will want to set immediately.


Go to Accounting > Advanced> Financial Settings



You can now set your VAT/tax details as required.


File the most recent tax period you’ve already submitted. Xero will then be able to recognise any future transactions entered that are dated back into historical tax period as “late” claims. These will then automatically be included in the next tax Return.


Access the Tax Returns page by clicking Accounting and selecting VAT/Tax Return.






If it’s a UK Xero organisation, you’ll be prompted to choose either “Making Tax Digital (MTD) VAT” or “VAT without MTD”.

Choose VAT without MTD and you can always return to setup MTD later.


If you already see an MTD page as per below then scroll to the very bottom to select


“Go to VAT without MTD”.


For all regions, pick the dates for the most recently submitted  tax return (the dates shown below are for example only) and then “Create” the Return to show the appropriate details.



Then choose “Finalise VAT/Tax return”

 


You are hopefully already aware of our tax limitations and that the Tax Returns may not agree. You can adjust the balances or leave them as they are.  Once you’ve Finalised the return you should see the following message indicating the return has not been submitted.





For UK organisations, if so required, you can now choose the option to Sign up for MTD that will appear on the VAT return page.


Note that when preparing your first VAT/tax Return in Xero (the first to be submitted after since converting), it won’t include any unfiled “late” claims relating to prior periods and may be incorrect if we’d had to use some workarounds. We recommend you carefully check the figures in this first Xero VAT/tax Return. If the figures provided by Xero are different to those you need to file, you may need to enter a manual journal or adjustments in Xero necessary to submit the correct figures. This will only affect VAT/tax Returns to be submitted that include converted data. Subsequent VAT/tax Returns containing only entries made after the conversion should not require any manual adjustments. To read more about why VAT/tax Returns may be different for the same period in the old and new software please click here.


Allocate invoices or bills to credit notes

If we’ve applied workarounds there could be invoices or bills that were paid and allocated in the source system that we haven’t been able to convert as allocated in Xero. The payment should have been converted so the overall customer or supplier balances should be correct. Allocating the invoices or bills will correct the list of individual outstanding items so they agree to your source.


Xero Central provides instructions on allocating these:


Apply a customer’s credit to an invoice – Xero Central


Apply a supplier’s credit to a bill – Xero Central


Tidy foreign currency (if applicable)


The recommendations below may not always be required or optimal for your user case. Please read them carefully and consider if they are relevant to you before attempting to apply them.



All bank accounts will be in base currency so create new foreign currency bank accounts. You’ll need to have added your currency to Settings > Currencies first. Once the currencies are added, navigate to Accounting > Bank Accounts and click Add Bank Account. Follow the prompts making sure to select the correct currency for the bank account.





Once you have the new foreign currency account, you may wish to transfer the home currency balance into the new foreign currency account. Do this by navigating to Accounting > Bank Accounts and selecting Transfer Money. Choose to transfer from the home currency account to the foreign currency account. Enter the date to be the same as the “convert to” date selected for the conversion. Apply an exchange rate such that the home currency account will be emptied and the deposit in the foreign currency account will reflect the correct foreign currency amount.


If there are unreconciled foreign currency transactions, you may wish to transfer the unreconciled transactions as individual Transfer Money transactions. The remaining balance can then be transferred as a lump sum and manually marked as reconciled.


If you have any outstanding foreign currency invoices or bills before converting, then these will also have been converted to their home currency equivalent value. You may wish to edit (or void, then re-enter) these to correctly reflect the foreign currency values owed or owing.