In this post, I am going to talk about how to setup your beginning balances for your general ledger and subsidiary ledgers in preparation for your ERP implementation. Firstly, you have to decide the cut-off period where you want to start encoding transactions. Some companies use the latest audited financial statement while others use the last interim financial statements.
The later the cut-off period, the more effort you will take in terms of encoding/uploading transactions to catch up with the current period. I personally prefer the latest interim financial statements to make use of the system and realize your efforts the soonest time possible.
The general ledger balances refer to the balances of each chart of accounts. Normally this is the trial balance of the chosen cut-off period.
Beginning balances of your receivables ledger are the open invoices of the customer. Important information is the customer code/name, invoice number, invoice date and particulars.
Payables on the other hand are the open accounts payable vouchers from your suppliers. It should include the supplier code/name, voucher number, voucher date and particulars.
For cash is the cash balances per bank account.
For inventory, they are the actual count of each item including its value.
For fixed assets, they are the actual count and book value of each fixed asset. Important information are fixed asset code/name, specifications, serial number if applicable, property number if applicable and the book balance as per cut-off period.
There you go, those are the beginning balance information you need to establish to be able to make use of your ERP system prior to go-live. Some companies encounter difficulties in coming with these information as many small businesses don’t even have a balance sheet.
If your objective is to full utilize the ERP, it is important to allocate time and effort to prepare these beginning balances.
If you are still in user acceptance testing (UAT) stage, it is okay to come up with interim balances or even dummy balances at first.
This will be the last post about the ERP data preparation series. In my next series, I will talk about the actual ERP software configuration, from company organizational setup, to each of the ERP modules.
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