Opening Balance Migration Approach for effective Implementation: Part-2 for Microsoft Dynamics 365 Finance and Operations

Hello everyone, welcome to the next blog on having smooth transition from legacy system to Microsoft Dynamics 365. In this blog we will talk about most critical activity from finance perspective for any implementation.

Yes, we will talk about “Opening Balance Migration from legacy system to D365”. So, let’s start.

Note-1: First of all, the most critical exercise which we should do before deciding on opening balance define the chart of account for D365 as per customer requirement and then map old chart of account with new D365 chart of account.

Note-2: Create one Main account “9999” as Temp account for opening balance (I will explain why it is requiring)

Note-3: Create following journal names which will be used for posting opening balance:

1. General Journal (Daily)
2. Fixed asset Journal
3. Movement Journal

Now, let’s assume we have the trial balance from legacy system with new D365 chart of accounts. Foe the example, I am going to take following one and based on this I will try to explain how we should migrate the balances.

Now if you observe in the above TB, we have two type of main accounts which has the closing balance:

1. Ledger Account
2. Control Ledger Account
   • Accounts Payable
   • Accounts Receivable
   • Bank
   • Inventory
   • Fixed Assets

So, now all these Main account balance can not be posted directly to the ledger, it has to be posted through subledger, so what are the subledger for above control accounts:

1. Accounts Payable will be posted through Vendors
2. Accounts Receivable will be posted through Customers
3. Bank will be posted through Bank accounts
4. Inventory will be posted through Items
5. Fixed assets will be posted through fixed asset

Note-4: It is require consultant to plan the opening balance template in such a way that with control ledger closing balance, we ask the breakup with subledger as well from customer.

Note-5: We should collect the details of only open transactions, there is not requirement of capturing details for closed transactions.

Note-6: We will use “temp -9999” account as offset account to post all the balances which in the end should be “Zero” since we have balanced trail balance.

Note-7: Capture original transactions posting date in “Document Date: and voucher in “Document Number” for future reference.

So, now let’s start with each control account one by one:

1. Accounts Payable: We need to have the vendor wise open transactions details of each payable control account, in my example I have only takes “Accounts payable” but you might have advances as well, so collect details for each posting profile and create the different sheet.

Here is my example based on above TB, accounts payable balance breakup:

2. Accounts Receivable: We need to have the customer wise open transactions details of each payable control account, in my example I have only takes “Accounts receivable” but you might have advances as well, so collect details for each posting profile and create the different sheet.

Here is my example based on above TB, accounts receivable balance breakup:

3. Bank: We can post all the bank balance as consolidate bank balance and make sure that all the transactions or the balance is completely reconciled in legacy system

Here is my example based on above TB, Bank balance breakup:

4. Fixed assets: Now fixed asset balances have to be posted in two steps, one for acquisition and other for depreciation. All these transactions should be posted through “Fixed asset Journal”.

Prerequisites: All the fixed asset masters with details should be created and status should be “Not Acquired “

Step-1: Post all the asset value as per the actual capitalization cost.

Step-2: Post the accumulated depreciation against all the acquired assets

After doing so, you will be able to have “Net book value” for each subledger and also closing balance will be posted for asset and accumulated depreciation main accounts

5. Inventory: Inventory balances should be posted through the items and before that make sure we have the correct posting profile setup for all items. To post all the inventory balances we should use “Movement Journal” because we have the flexibility to define the offset account which will be the account for us.

6. Ledger: In this we can simply post journal entry directly to all the ledger which are not control account.

Now, after posting this you should have all the balances posted in respective ledgers with subledger posting as well, your TB will be matched as per the legacy system.

Now, coming to the “9999-Tem” account that should be ideally “Zero” after posting all the balances, if not then that means we have made the mistake somewhere.

Hope this will help you to plan the opening balance migration in your implementation.

That’s it for this blog. I will be back with new topic soon. Till then keep reading and sharing with your network as well.