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hello there mark cunningham here and in this video we're going to have a look at how you can put conversion balances into xero when you're converting to xero from another bookkeeping system the first thing we need to do for our conversion balances is pick a conversion date so to do that we just go into accounting and advanced and then into conversion balances and in here we just need to click on this conversion date button at the top and now what you need to do is you need to pick a month at which you're going to convert so just like it says here it says enter the date that you began processing all your transactions in xero it's easiest when you set your conversion date to be the start of a gst period so that's an australian thing and it's not absolutely necessary you don't have to pick the start of a gst period but down here what you need to do is is pick a month and a year so the year's pretty easy you just choose the year that you're in at the moment and then for the month when you choose say april here it says for this conversion date you need to enter conversion balances also known as opening balances as that 31st of march so that means we basically start using xero from the first of april to do our accounts and we need to bring over the balances from another system as at the 31st of march so the bank balance and the accounts receivable and payable inventory etc so if we change that let's say we choose may that changes the date there to the 30th of april that it's recommending so that's always the last date of the month before the month that you choose up here so i opened this particular xero file in april so i had the intention of actually using xero from within april which means yes i do need to bring in my conversion balances from my other system as at the 31st of march so that's the date that i'll pick so that's how you need to choose the date there's also a link here that takes you to tips for choosing a conversion date so if you're a bit confused and you need to read more about it just go into xero help and see what you can find so april is right for me so i'll click on save and that's done and now xero has said to me that i need to enter my account balances as at the 31st of march 2019. okay next up we're going to have a look at how you can bring in the conversion balance of a bank account so in my company xero file here if we go into advanced and conversion balances we don't actually have in this lesson accounting and bank accounts i'll just quickly set one up so i'll just add bank account and then for the purposes of this exercise i'll just put anything in here so i'll just choose anz and i'll give it a name so i'll just call it the business bank account and i'll choose the type so it's just an everyday bank account and then i just need to give it a bsb an account number okay so i've just put some pretend information in there i won't worry about these batch payments i'll just continue on and now we have a business bank account set up so we won't worry about the bank feeds or anything at this point because i'm i'm just showing you uh how to put the conversion balance in so we'll go back to advanced and conversion balances and now we have the business bank account there so what we need to do now is put the balance of the bank account in as at the 31st of march so i'll just keep it simple and i'll just put ten thousand dollars in just like that and you can see here that the total debits and the total credits don't match now which is fine it'll still let us save it so that's that so the business bank account now has a debit balance of ten thousand dollars on the 31st of march so what that means is that when we go back to our business bank account you can see there now it's got a statement balance of ten thousand dollars so when we actually do set up the automatic bank feed so that the transactions automatically come into xero or we do manual statement imports for transactions and there will be transactions after the 31st of march so from the first of april onwards it means that it'll have a ten thousand dollar balance starting point so the bank account will actually reconcile so if we don't put in our opening balance then the bank account won't reconcile when we bring those um when we bring those transactions in so if i just quickly flick over to the demo company so i just want to quickly show you that if it doesn't reconcile it means that these amounts here the balance in zero and the statement balance will be out so what we need to do is we need to make sure i'll just go back to the company and there you can see now we've got a statement balance so when those transactions come through and we have a zero balance once we reconcile them in the system that statement balance and the zero balance should always match because now we have our conversion balance in there so that's how you set up a bank account and you get your conversion balance in for those bank accounts i should also point out that it's exactly the same process for any other bank accounts that you've got with your business and also for other financial products such as credit cards next up we're going to put in our accounts receivable conversion balance so what we need to do on the main conversion balances screen here is go to the accounts receivable line and put in the total amount of the invoices that are due to us on the conversion balance date which is the 31st of march in this example so i'll do a really simple example first and i'll just say that we've only got one invoice that's owing to us on that particular date and we'll say it's for five hundred dollars and xero's given us a little question here asking us if this is multi-current currency which it's not so i'll just get out of there so once you've actually entered the number in what you need to do is click on save and zero takes you to a screen where you need to add in the individual invoices so we're saying we've got five hundred dollars owing to us and now xero wants to know what invoices actually make up that five hundred dollars so just to continue on with the simple example i'll just pretend it's just one invoice so i'll click on add invoice and then here in the new invoice screen we just need to create the actual invoice that's owing on that date so i'll just go ahead and put some information in here now so i've just finished filling out the details of this invoice so i've chosen the the company name there that owes us the money there's an invoice number there's an issued date here which you'll remember our conversion date is the 31st of march so the invoice needs to be outstanding on that date so the issued date needs to be before 31st of march i've just put a due date in there as well and some particulars down here it's come up to a total of 550 but that's because of the gst so i'll just change that tax to be including so that's now 500 dollars which is how much we set out the total of our accounts receivable was so that's fine and then i'll just finish off by marking as done and that's it so that's now awaiting payment up here so i'll just duplicate the screen and go back into advanced and conversion balances and now if we click on save so that's confirmed it now so now we've got 500 in our conversion balance for accounts receivable and that's matched up to the total of the invoices that are due on that date so if i go into invoices we can see here for this particular company we've just got the one invoice the one we just created the due date uh sorry the the date there of the 17th of march is before the 31st of march so it's still owing on that date and the total is 500 which is the total over here so that's a simple example with just one invoice owing you'll probably have more than one invoice owing on your conversion date so what you need to do is put in the full amount of all of the invoices that are due so if we change that now and we say that's say 800 and click save now it's taken us back to that screen and it's telling us that we're out by 300 which we are so we've got the 500 invoice in there 800 worth of accounts receivable so we need another 300 worth of invoices so that could be made up of one invoice it could be made up of a couple of invoices and also credit notes so we just need to go in and put in another one so i'll do that now i'll just click on add invoice and again i'll just fill in the particulars so there it is i've just put the details in so we have a 300 invoice now with a date of issue before the 31st of march so i'll just click done and then we'll go back to advanced conversion balances and now it's telling us that we haven't saved it again so we'll click on save and there we are so that's letting us know now that everything is equal so now we have two sales invoices that are outstanding uh to be received on the 31st of march they total eight hundred dollars so we come back over here and click on all they are there for eight hundred dollars and they equal our accounts receivable balance there so that's how you get your accounts receivable conversion balance into xero and how you put the invoices in to get to the total next up we're going to put in our accounts payable conversion balance so similar to the last lesson on accounts receivable we just need to put a balance in here this time a week in this lesson we're going to credit aside because it's payable on the conversion balance date of the 31st of march so let's just put in a thousand dollars and then we'll hit save and now it's taken us to the screen where we need to enter the actual bill details so i'll add one bill into this um enter build details screen here so i'll just create the bill okay so i've just put in some details there so this is an electricity bill that was issued to us on the 1st of march and we still hadn't paid it by the 31st of march so it's a bill that we owe it's part of our accounts payable on the conversion date so i'll just hit save and that's that so now we've used up four hundred dollars of the one thousand dollars so all we need to do now is just put in some bills to match the other 600 so i'll just do that with one more bill and i've just put in some details there for monthly rent for 600 in total so i'll just hit save and there we are so now we have two bills in there outstanding on the 31st of march that have not been fully paid giving us a thousand dollars which equals the accounts payable balance so that's come up as much now and we can click on next and back now on the conversion balances screen and that's it we can see that we've got accounts payable in there and there's no message telling us that things don't balance so that's it so that's all you need to do to put your accounts payable balance in as a conversion balance and to put in some bills to match the total now that we've got our bank account balance and our accounts receivable and payable balances in at the conversion date we can go ahead and put in our other account balances so you can put in the rest of your your assets and your liabilities which will be balances on the 31st of march and you can also put in the totals of your expenses and revenues to date so that will be the total from the 1st of july to the 31st of march there so that's for my dates obviously you'll probably have different dates for when you're doing your conversions but what you really need to do is get a trial balance from your old system and put in the amounts for each account on that particular date so for this particular example here what we can do is we can actually bring up all of the general ledger codes that we've got in our chart of accounts by clicking on this show all accounts link so i'll click on that and that's brought up all of the accounts in our general ledger so the first one here we've got a balance for that the bank account and then as we go further down we can find our accounts receivable and our payable that's already done and then up here we've got our revenue and income accounts cost of goods sold and then a whole bunch of expense accounts down here and then further down we've got some assets and some liabilities so what i would need to do if i was converting over a business for real is get the trial balance as at the 31st of march and go in and enter all of these amounts and then when i get down the bottom here the total debits and the total credits should equal so what i'll do for this particular exercise is i'll just go in and enter some details and then we'll come back and have a look at it okay so what i've done is i've just gone through and put some amounts in here pretending that i've taken a trial balance as at the 31st of march from my old system and i've just plugged the numbers into here into zero so we've got half a million dollars worth of sales there i've just said there's 200 grand worth of cost of goods sold i put in a bunch of amounts here just for the expenses that we've accumulated to date for that particular period so that's all on the trial balance including some wages and salaries and the accounts receivable and accounts payable we already had in there so i've also said there's 300 grand worth of inventory and there's a bit of office equipment and computer equipment with depreciation so i've just put the balance down here to the owner's equity so basically down the bottom it gives you the totals and it gives you a balance if it doesn't balance so when you're putting this in you don't actually have to get it to balance in order to click save and then go in and start using xero but when you go to do your year-end accounts you will need your conversion balances to balance so just for the purposes of this exercise i've just ignored all these other asset and liability accounts and i've just put the balance there to owner's equity just so we can see it all balanced to 682 420 down the bottom so once we've got all that in we just click save and there we can see now the balances are saved for the period first of july to 31st of march and we scroll down the bottom and it's all in balance so we've got that in there if if you don't want all these lines to show that have nothing in them you can click on remove zero balances and that just brings up the list of conversion balances without any of the other blank lines in there so that's it that's all you need to do to finish off your conversion balances in xero and once it's in there you can go ahead and use your accounts knowing that all of your asset and liability accounts are going to balance and your expenses and revenues are up to date as at the 31st of march so that's it that's how you do your conversion balances now that we've finished putting in our conversion balances there's one more thing that we can do which is to add the comparative balances so this is not compulsory you don't have to do this if you don't want to but what you can do is you can put in some balances for these accounts for the year before you start using xero so that you can compare the numbers when you do your reporting so i'll just duplicate the screen here and we'll go into the balance sheet report and what i want to do is run a balance sheet at the i'll just go up to the period that we're using that we're first using xero for this company which is in april so we'll just click on the 30th of april and update and there we have our balance sheet as at the 30th of april 2019 so these amounts here are the ones that we put in um to our conversion balances so there's the ten thousand dollars for the bank account the eight hundred dollars for accounts receivable etc if we go into our settings and we say compare with the previous period i'll put that back at custom so that should bring up comparing it to the last financial year at that particular month end so we're comparing the 30th of april this year being the first month that we're using xero to the 30th of april last year and we don't have any numbers in there because we weren't using zero last year so there's nothing in the system so to get numbers in there we need to enter comparative balances so if we go back here what we can do is we can add comparative balances to our general ledger codes and to do that you just click on the add comparative balances button and it will bring up the prior year and then you can go into that prior year and you can add the numbers in here so they're all zeros at the moment because we haven't put anything in there and there's another year here so every time you click on this button it brings up yet another year in in the history there so you can put in more than one year history so i've clicked on that button three times which is why i've got three years of history here but for this exercise i'll just show you what happens when you put in some amounts into the year before so just going back to the first tab these are the opening balances that we put in these are the conversion balances and like i showed you before the ten thousand dollars for the bank account comes over here as does the rest of the assets and liabilities into the balance sheet so what we want to do now is populate this amount here so if we put in if we go to our comparative balances tab for that particular year and we put in say eight thousand dollars like that and we'll scroll down to the bottom and hit save now we'll go back to our balance sheet and we'll hit update and that hasn't brought it through because that particular balance here is actually at the 30th of june so let's change that now we'll just change that to the 30th of june both years and there we are now we've got 10 000 for this year and we've got 8 000 at the 30th of june last year so like i said before you can actually put in prior years as well you can put in more than one prior year so if we go back one more year we could say that we had five thousand dollars in the bank at the end of 2017 click save go back to our balance sheet and we'll compare it to two previous periods and there's the history there now so the 30th of june every year we've got those balances in there so you need to do that for all of the accounts and all of the years that you want to have numbers in the xero system for your reporting purposes and it's the same procedure for every single account whether it's an asset a liability owner's equity that goes into the balance sheet or whether the revenues and expense accounts that go into the profit and loss so it's exactly the same process so i don't need to go through and show you everything you just follow what i've just done in this screen here and save it and it will flow through to whatever report you need whether it's the balance sheet or the profit and loss or anything else so that's it that's how you do your comparative balances in xero okay that's it for this video don't forget to subscribe to this channel if you'd like to see more free videos and also check out the links in the description below for our xero courses so thanks for watching and i'll see you in the next video