Switching to cloud accounting is not just about opening a new software account and importing some data.

A successful move needs planning, preparation and a clear idea of what you want the new system to do for your business.

Rush the process and you can create confusion, duplicate work and messy financial records.

Plan it properly, and the move can give you cleaner information, better processes and a system your team can actually use.

In this episode, we break the transition into three practical stages: preparation, migration and what happens after you go live.

About this episode

There is an old British Army saying about the 7 Ps.

“Proper planning and preparation prevents piss poor performance.”

That principle applies perfectly to changing accounting systems.

The software itself is only one part of the move.

You also need to think about your data, your team, your reports, your bank feeds, your integrations, your training and the date you actually make the switch.

So rather than treating migration as one big technical event, we break it into three manageable stages.

Before switching to cloud accounting, define what you need

Stage one is preparation.

Before choosing how to move the data, work out what you actually want from the new system.

For example, ask:

• What financial reports do we need?
• Do we need to report by department?
• Would project-based reporting be useful?
• Could location-based reporting help?
• Are there separate funds we need to track?
• Which systems need to connect to the accounting platform?

As a result, the answers affect how you structure the new system.

For example, a business selling several services might want to analyse each service separately.

A charity may need to report income and spending by funder or project.

Therefore, the way you want to use the information should influence how the data is captured from the beginning.

Think about integrations before you move

Cloud accounting becomes more useful when it fits into the wider business system.

Depending on the software you choose, you may be able to connect it with:

• bank accounts
• CRM systems
• websites
• inventory systems
• payment platforms
• payroll systems
• time-tracking tools
• other business applications

However, do not connect systems simply because the integration exists.

First, ask what information needs to move between them and what problem the connection is supposed to solve.

That way, automation supports the business rather than creating more complexity.

For the broader advantages of connected accounting systems, see our guide to what cloud accounting can do for your financial processes.

Set up bank feeds carefully

Bank feeds are one of the major time-saving features of digital accounting.

They allow transactions from your bank account to flow into the accounting system, reducing the need to enter every transaction manually.

As a result, reconciliation can become faster and your records can be kept more current.

However, bank feeds do not remove the need to check the information.

Transactions still need to be reviewed, matched and categorised correctly.

Communicate the change with your team

A new accounting system affects more than the finance team.

Anyone who enters information, reads reports, sends invoices or relies on financial data may be affected.

Therefore, communication should happen before the switch.

Explain:

• why the business is changing systems
• what will be different
• how the change should help
• which challenges may come up
• who will be responsible for each part
• where training will be needed

This also gives people a chance to raise concerns early.

As a result, change becomes much easier to manage when people understand what is happening and what is expected from them.

Train people before going live

Do not wait until the first day of the new system to show everyone how it works.

Instead, training should happen before the main switchover.

That may include people who:

• enter transactions
• send invoices
• approve costs
• reconcile the bank
• read management reports
• manage credit control

As a result, some users will need detailed training, while others may only need enough knowledge to access reports or complete a specific task.

The aim is not to make everyone an accounting-software expert.

Instead, give each person the knowledge they need to use the system properly.

Choose a sensible migration date

The date you move systems matters.

If you already have an accounting system, a clean accounting break can make the transition easier.

For example, businesses often consider:

• starting a new financial year
• reaching the end of an accounting period
• completing a VAT quarter
• another natural reporting cut-off

There is no single date that works for every business.

However, choosing a logical cut-off can make it easier to compare the old and new systems and reduce confusion about which system contains which transactions.

Clean your data before migrating it

Moving systems is also an opportunity to tidy up old records.

Do not automatically transfer everything simply because it exists.

Instead, review:

• customer records
• supplier records
• contact details
• email addresses
• payment terms
• bank details
• your chart of accounts
• old or inactive contacts

For example, you may have customers or suppliers who have not been active for years.

Similarly, you may have account headings that no longer reflect how the business operates.

Therefore, migration is a good opportunity to clean the data rather than carrying old problems into a new system.

Decide how much history to transfer

You also need to decide how much historical information should move into the new system.

Possible options include:

• all available history
• several recent years
• opening balances with limited historical detail
• no detailed historical transactions

The right answer depends on the business, cost, reporting needs and the quality of the existing data.

As a practical starting point, the episode suggests considering around three years of financial history so you have useful comparative information available.

However, that is a practical recommendation from the episode, not a statement of how long financial records must legally be kept.

Stage two: manage the actual migration

Next comes the actual transfer.

This is where the new system is configured and the required data is brought across.

The important thing is not to make the change unnecessarily abrupt.

If possible, give yourself enough time to:

• set up the new system
• test how it works
• train the team
• check imported data
• compare reports
• solve problems before the full switchover

A rushed move increases risk.

By contrast, a planned transition gives you time to identify problems while you still have access to the old system.

Consider running both systems temporarily

For some migrations, it can be useful to run the old and new systems alongside each other for a short period.

This does not mean maintaining two systems forever.

Instead, the temporary overlap gives you a chance to:

• build familiarity
• compare reports
• check balances
• confirm the data has transferred correctly
• identify missing information

However, parallel running only helps if the old system is reasonably accurate and up to date.

If the existing records are already in poor condition, those problems need dealing with as part of the migration.

Get help where you need it

You do not have to manage every part of a migration yourself.

For example, if the system contains years of history, complicated VAT records, multiple bank accounts, payroll or unusual reporting requirements, professional support may save considerable time and reduce risk.

Start with your existing accounting team if they have the relevant experience.

Alternatively, get specialist support with setup, migration and training.

If you are considering Xero, our guide to getting started with Xero accounting gives you a useful starting point.

Stage three: what happens after migration?

Finally, the work does not stop when the data has moved.

Once the system is live, the next job is making sure the business actually gets value from it.

Start with the most important processes first.

For example:

• send customer invoices
• issue quotes and proposals
• follow up unpaid balances
• manage supplier bills
• set up bank feeds
• reconcile the bank
• keep credit control up to date

Then expand gradually as people become more comfortable.

This is often better than trying to use every available feature from day one.

Build the system incrementally

Cloud accounting platforms can do a lot.

However, that does not mean you need everything immediately.

Start with the areas that produce the biggest practical benefit.

For example, strong invoicing and credit control can have an immediate effect on cash management.

Our guide to using digital invoicing to reduce payment friction explores that part of the workflow in more detail.

Once the core processes are working well, you can look at further automation, reporting and integrations.

Keep training and reviewing the system

Migration is not the end of the learning process.

Instead, people become more confident as they use the software regularly.

“It's like taking the stabilisers off your bicycle.”

Some teams may need follow-up training.

New employees may also need onboarding later.

Meanwhile, reports and processes should be reviewed periodically to check that the system still fits the business.

Ask:

• Are the reports useful?
• Is the team using the system correctly?
• Where are errors occurring?
• Could more work be automated?
• Does the chart of accounts still make sense?
• Would any new integrations genuinely help?

Then make adjustments as the business develops.

A three-stage cloud accounting migration checklist

Stage 1: Prepare

• Define what you need from the new system.
• Decide which reports and categories matter.
• Identify useful integrations.
• Communicate the change with your team.
• Plan training and resources.
• Choose a migration date.
• Clean customer, supplier and account data.
• Decide how much history to transfer.

Stage 2: Migrate

• Set up the new accounting system.
• Import the required data.
• Check balances and reports.
• Test bank feeds and integrations.
• Run systems in parallel briefly if appropriate.
• Resolve errors before the final switchover.

Stage 3: Improve

• Start with the most important workflows.
• Keep bank reconciliations current.
• Get invoicing and credit control working properly.
• Add more automation gradually.
• Continue training where needed.
• Review reports and team feedback.
• Adjust the system as the business changes.

FAQs

What should I do before switching to cloud accounting?

First, define what you need from the new system. Then decide how you want to report your financial information, clean your existing data, communicate with your team and choose a sensible migration date.

When is the best time to change accounting systems?

There is no universal best date. However, a natural accounting cut-off such as the beginning of a financial year, end of a reporting period or end of a VAT quarter can make the transition easier to manage.

How much accounting history should I migrate?

It depends on your reporting needs, the quality of the old data and the cost of migration. As a practical guide, the episode suggests considering around three years so you have comparative information available.

Should I run my old and new accounting systems together?

For some businesses, a short period of parallel running can help check balances, reports and processes before the old system is retired. However, it should be temporary rather than an ongoing arrangement.

Do I need professional help to move to cloud accounting?

Not always. A simple new business may have very little data to migrate. However, established businesses with complicated records, VAT, multiple systems or significant history may benefit from specialist help.

Should I use every cloud accounting feature immediately?

No. Instead, start with the processes that matter most, such as bank reconciliation, invoicing, supplier bills and credit control. Then add more features as you become comfortable with the system.

What happens after the migration is complete?

Keep reviewing the system, training users and improving processes. Ultimately, the aim is not simply to move the data, but to make the new system genuinely useful to the business.

Episode Timecodes

• 00:00 - The 7 Ps and planning your migration
• 00:57 - Stage one: preparation
• 01:16 - Defining what you need from the new system
• 01:55 - Categories, reports and management information
• 02:29 - Integrations and connected systems
• 02:50 - Bank feeds
• 03:31 - Communicating the change with your team
• 03:55 - Training and allocating resources
• 04:17 - Choosing the migration date
• 04:59 - Preparing customer and supplier data
• 05:36 - Reviewing the chart of accounts
• 05:58 - Choosing how much history to transfer
• 06:31 - Cleaning up old records
• 06:49 - Stage two: the migration
• 07:15 - Training before the switchover
• 07:32 - Cross-checking the old and new systems
• 07:56 - Getting professional help
• 08:10 - Stage three: what happens afterwards
• 08:30 - Starting slowly and incrementally
• 09:05 - Bank reconciliation, invoicing and credit control
• 09:23 - Building efficiency over time
• 09:48 - Ongoing training
• 10:09 - Monitoring and adjusting the system
• 10:27 - Making the new system work for your business

Related episodes and guides

• What Cloud Accounting Can Do for Your Business
• Using Digital Invoicing to Improve Payment Collection
• Getting Started With Xero Accounting
• Why Good Financial Records Matter

Key takeaway

Switching to cloud accounting works best when you treat it as a process rather than a software purchase.

First, prepare properly.

Define what you need, clean your data, communicate with the team and plan the switchover.

Next, manage the migration carefully and check that the new system is accurate.

Finally, build confidence gradually, automate useful processes and keep improving the system as the business develops.

The software can remove a lot of heavy lifting, but proper planning is what turns the move into a genuine improvement.

Further Support

If you are planning a move to cloud accounting, setting up Xero or need help cleaning and migrating existing records, you can contact us for an initial chat.

You can also explore our online accounting support for help with setup, migration, training and ongoing use.

Our free online business calculators can support your wider financial planning.

For more practical finance and tax guidance, visit the I Hate Numbers YouTube channel, or listen and follow on Apple Podcasts.

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In my business life, I'm guided by the 7 Ps. That's an old British Army adage, which stands for proper planning and preparation prevents piss poor performance. Now you may be thinking, what's the 7 Ps got to do with this week's podcast, Mahmood? Well, this week's podcast is about having made that decision that cloud and digital accounting is for you, and why wouldn't it be, is how we actually make that move.

And in this week's I Hate Numbers podcast, I'm going to outline the three things you need to be aware of when you actually make that move to cloud accounting. Thank you very much, British Army. Let's crack on and explore those three stages.

Now having already made that decision that cloud accounting is the thing that you should be doing in your business, irrespective of your size, the type of business you are, and please do check out the previous podcast where I've talked about this topic where we're now going to have a look at what stage one is.

And stage one is about the preparation. In the preparation phase, we're going to be looking at three things. Definition i.e. defining your requirements, communication, and that's the communication that you need to do with your team and choosing the right migration tools and preparation of the data. Let's expand on those.

Now, once that decision is made to move across to the cloud, you need to think about what you actually need from your new system. Now, whatever that system of choice is, and as a personal heads-up, personal preference, I recommend Xero, then we have to outline what we actually need to take out from this new system.

So for example, there is something called tracking categories. So if you sell more than one product, if you provide more than one service, if you're a charity that has funding coming from a number of different funders, if you provide different services, anything that could be broken down in that manner can be assigned tracking categories.

So, decide how you want to categorise transactions, whether it's departmental, project-based, location-based, or funds-based. What are the outputs that you need that you and your management team require? Those financial reports that are required will link into how the data is going to be processed and captured, and they're critical.

Now, even if you don't make a definitive list, you're not quite sure, you can certainly modify those on, once you've actually migrated and started to use the system. But just have a think about it at the beginning, it may save some headache later on. What are the systems that you want your cloud system to integrate with?

So, for example, Xero is an application that has an app marketplace and it can link to many, many different feeder systems. So if you want to integrate with your website, if you integrate with your CRM system, whatever other business systems you have, there's the ability to make them talk to Xero or any other platform that you choose.

Bank feeds. Now, one of the powerful things about digital accounting is that you can connect your bank account to your accounting system, and you have what are called bank feeds. What that means is that those transactions that flow through your bank will also be imported, linked into, and entered into your accounting system.

Just think of all that time that you're going to save. Now there are available apps and Xero has 300 plus apps for example. So, whether it's dealing with inventory, time, employment, management, payroll or whatever, then there's an app for that. The next thing is the communication with your team, and I can't overemphasise how important communication actually is.

They're implementing a new system, just like any change will affect everyone involved in your financial processes or anyone who's on the receiving end, and it's important to make sure you communicate that clearly. You need to inform your team, let them know about the upcoming change and how it's going to benefit the business, any challenges there might be, get them aired. You need to make sure you've got adequate training sorted out so all your team are familiar with the new way of working.

Whether they're a user who wants to access the information, whether there's somebody who's going to be involved in entering the data. Make sure the training is provided before you go live. You need to make sure you allocate as a business the adequate resources both in time, skills, and expertise to make sure that you are going to get the best out of a new system and mitigate any anxiety and fears.

The next thing you've got to consider at the preparation stage is when do you flick the switch, so to speak. Probably have a contradiction in a digital platform, but what's the migration date that you go for? Now, time is critical when you switch systems. Now, typically the best dates to choose if you've got an existing system is either at the end of a financial period, the end of your VAT quarter.

Obviously, if you're a new starter and you haven't got any historical data, the date may be something that's not as hardwired in. If you align your migration date to align with your VAT quarter, you've got a cleaner break as well. Now, one thing we've also got to consider is the data preparation. Now, if you're going from one system to another, there are a number of things you need to think about.

Number one, what is in your existing system that is no longer required in the new system? And it's not unusual over a period of time that companies will build up, for example, a supplier and a customer database, having those financial and contact details, and some of those customers and suppliers may no longer be active.

When it comes to the data preparation, it's useful to create a checklist of the data you'll need to enter and import. So, for example, customer information, the financial and contact details of your customers, supplier information, the details of those suppliers, including the payment terms. And there may be some in there, by the way, that are no longer active that you don't wish to take across to the new system.

So it's a good opportunity to do a bit of a data cleanup as well. Think about your chart of accounts. How do you want your accounts to be classified? What names would you like to adopt? And again, your existing chart of accounts may not be appropriate through the way your business runs, the way your business operates, and it may not be appropriate for the account headings you've got on any reports that come off.

Think about the bank information, the details of your bank accounts, so when you set up those bank feeds. Also, you have a choice about how much of your history, how much of your data do you want to transfer across. Now, when we deal with clients, when they migrate to new systems, they are given the choice of transferring all of their financial history,

some of their financial history, or none of it. I would suggest, as a bare minimum, you're looking at something like three years worth of financial data. So when you run the reports and you see how you're doing in your business, you can look at the historical perspective, that's always going to be useful. But the choice is yours.

Remember, this is an excellent opportunity to clean up your records. Get rid of old contacts, ones that are outdated, check the emails are appropriate. So it's a good opportunity to do a good data cleansing exercise as well. Now, that largely covers stage one. Let's have a look at stage two, and that's the actual migration.

Now my recommendation is that you run systems in parallel. Not forever, but on a temporary basis. So whatever you're using currently, if you're preparing to go live, having the new system in operation is going to be really useful. I would normally recommend… Now, if you could, for example, going to transfer and go to a new system at the start of your new financial year, probably about a couple of months before you go live, you set up the system or you get somebody like our team to set the system up for you.

You train, you're familiar with what it's going to be. And then when that switchover date comes, it's going to be less of an uphill struggle, and it'll be a smoother transfer. Now, there can be a high level of risk if you do it abruptly. So to mitigate it, as we said, run both systems for a short period of time.

Familiarity gives you a good opportunity also to crosscheck the data and the reports coming on the two systems to ensure that everything is accurate, and this presupposes by the way that your existing system is up to date, fit for purpose, and is doing what it should do. In my experience, many people who make the switch, they don't keep on top of their current accounting systems, and the accounts begin to look a bit of a mess.

Now, there are things and tools that you can do to actually help you with this migration. I would certainly say that you need to make sure you've got access to professional help. So I would speak to your current accounting team. If they have the experience, if they have the knowledge, they should be able to help.

If not, give us a call. Now, if you are a new business, you won't have those previous accounting systems to worry about. So your migration journey will be much simpler. Now, stage 3, the after. So we've done the preparation, we've done the migration. What happens next? Now you need to make sure that you get the maximum usage out of your new system.

Now my view would be, especially if you're new to a digital accounting platform like Xero, is that you start slowly and incrementally. So, if you don't have that financial expertise in your team, you might be a starting business, you might have a very small limited finance team, is start with the things that are most critical to the organisation.

So, things like issuing invoices to customers, getting those quotes done, getting the proposals out, converting them to invoices, sending out reminders, sending out statements. Do the same thing on the bills and the suppliers. Automate what you can. Get those bank feeds done and do things on an incremental basis.

So if you've got your bank reconciliations, your bank feeds, you're keeping on top of those, getting those invoices out the door, get that credit control sorted out from day one, then that's a great start. As time goes on, you can find out more, especially if you've got that training support where you can automate better.

Make those efficiency gains. The system will pay back for itself, I have no doubt on that one if it's used effectively and the additional features that you might need. Now check the notes out at the end folks here. So, we have an online planning tool called Budgetwhizz, which integrates with Xero. So if you are a fan of planning, and why wouldn't you be, you can produce those financial plans, those financial forecasts, and it can pull the actual data from Xero.

So therefore, that's a great way to look at the two. Now, as you go forward, again, if you feel comfortable, if you're very familiar with new systems, great, you can go off. It's like taking the stabilisers off your bicycle. If not, think about what future training you might need. It could be a catch-up, it could be a regular thing, it could be training people within your organisation as they come on new.

Consider that and factor that into your timescales, and you factor that into your budgets as well. Monitor and adjust as you go along. Now you need to regularly review your new system to make sure it's working for you. Look at the reports that are being generated, gather the feedback from your team. Are there any challenges that they've not quite aired with you?

Things that you can do, make adjustments to your chart of accounts, how things work. Just like getting a new system for anything here, it's familiarity and regularity that's going to be really important. Now what can we conclude? Well, moving to cloud accounting with Xero is a significant step forward in modernising your business's financial management.

It will save time, you will do a lot of the heavy lifting, and it’ll give you more opportunity to use that data to make sense of it and to get some valuable information for profitability purposes, planning, what's going on, and to evaluate and monitor your business. Now the journey doesn't end after migration.

There's a continual learning process and adaptation as you get the maximum out of your digital system. Now, folks, if you're ready to make that move, if you haven't already, you have questions about the process, please check out the show notes for our free guide on cloud accounting. Give us a shout if you need that support and help.

We'll be happy to chat but until then, happy migration. We hope you enjoyed this episode and appreciate you taking the time to listen to the show. We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.