For many UK businesses, accounting software is at the heart of their day-to-day financial administration. If you have been using Sage 50 for years, the thought of moving to a new system can feel daunting. However, switching from Sage 50 to Xero can bring significant benefits, particularly for businesses looking for greater flexibility, automation and easier access to their financial information.
Xero is cloud-based accounting software designed to make bookkeeping and financial management more accessible. It can connect directly to business bank accounts, automate elements of reconciliation, support VAT and Making Tax Digital requirements, and make it easier for business owners and accountants to collaborate.
So, what are the benefits of making the move, and what is actually involved in converting your Sage 50 data to Xero?
Why Switch From Sage 50 to Xero?
1. Access Your Accounts Anywhere
One of the biggest differences between Sage 50 and Xero is the way you access your accounts.
Xero is cloud-based, meaning your accounting information can be accessed through an internet connection rather than being tied to a particular computer or office network. This can be particularly useful for business owners, bookkeepers and accountants who need to work remotely or access financial information while away from the office.
It also makes collaboration easier. Rather than transferring backups or working from different versions of accounting data, authorised users can work from the same online system.
2. Reduce Manual Bookkeeping
Xero is designed to automate many of the repetitive tasks involved in bookkeeping.
For example, you can connect your business bank accounts so that transactions are automatically imported into Xero. The software can then suggest matches and help you reconcile transactions, reducing the amount of manual data entry involved.
You can also create bank rules for recurring transactions, helping to speed up the reconciliation process.
The result is potentially less time spent on routine bookkeeping and more time available to focus on running the business.
3. Keep a More Up-to-Date View of Your Finances
With bank feeds and online access, your financial information can be kept much closer to real time.
Instead of waiting for bookkeeping to be completed before reviewing your figures, you can log into Xero and see your current financial position, subject to transactions being entered and reconciled correctly.
Xero also provides dashboards and reporting tools designed to help business owners understand income, expenses and cash flow.
This can make financial information more useful as a management tool rather than simply something needed for year-end accounts.
4. Easier Collaboration With Your Accountant
Because Xero is cloud-based, your accountant can be given access to the same accounting records.
This can make communication more efficient and reduce the need to exchange backup files or manually transfer information between systems.
It also means your accountant can work with the most up-to-date information available, making it easier to provide advice throughout the year rather than only at the end of the financial period.
5. Integrate With Other Business Software
Another attraction of Xero is its ability to connect with other applications.
Depending on your business, you may be able to integrate Xero with systems used for payments, expenses, payroll, ecommerce, customer relationship management and other business processes.
This can reduce duplicated data entry and help bring different areas of your business together.
What Is Involved in Moving From Sage 50 to Xero?
Moving accounting software is more than simply signing up for a Xero subscription. A successful migration involves planning, transferring the appropriate data and checking that everything has been brought across correctly.
The exact process will depend on the version of Sage 50 you use, how much historical information you need and the complexity of your accounts.
Step 1: Review Your Existing Sage 50 Data
Before starting the conversion, it is important to review your Sage 50 accounts.
This is an opportunity to identify:
- The financial year and accounting period you want to migrate
- Your chart of accounts
- Customer and supplier records
- Outstanding invoices and bills
- Bank accounts
- VAT information
- Opening balances
- Fixed assets, if applicable
- Historical transactions you want to retain
- Any other information required for ongoing bookkeeping or reporting
It is also a good time to tidy up old or duplicate records rather than transferring unnecessary information into your new system.
Step 2: Choose the Right Xero Subscription
Xero offers different plans, so the appropriate option will depend on the size and requirements of your business.
Consider how many invoices you raise, how many bills you process, whether you need payroll, the number of users who need access and whether you require features such as project tracking or multiple currencies.
It is worth choosing the subscription based on what your business actually needs rather than simply selecting the option recommended by the software.
Step 3: Convert Your Sage Data
This is the part of the process that often causes businesses the most concern.
Fortunately, there are established tools for moving data from Sage to Xero. Account8 currently partners with Movemybooks, which can convert up to 24 months of selected Sage data to Xero under its switching offer.
The migration process can involve exporting a Sage backup, connecting the conversion service to your Xero organisation and transferring the relevant accounting data.
However, not every piece of information necessarily transfers in exactly the same way. This is why the migration should be planned rather than treated as a simple file conversion.
Careful consideration is needed if the business uses tracking categories or departments and/or foreign currencies as this can complicate the data transfer.
Step 4: Check Settings in Your Xero Organisation
Once you have chosen your subscription and migrated the data over, your Xero organisation can be configured.
This normally includes setting up or amending:
- Business details
- Financial year-end
- VAT settings
- Chart of accounts
- Bank accounts
- Customers and suppliers
- Invoice settings
- User access
- Tax rates
Getting these settings right at the beginning is important because they form the foundation of your new accounting system.
Step 5: Set Up Your Bank Feeds
Once your Xero account has been created, your business bank accounts can be connected.
Xero’s bank feeds allow transactions to flow into the accounting system automatically, where they can be reviewed and reconciled. Depending on the bank, historical transactions may also be available when the connection is first established.
It is important to avoid accidentally duplicating transactions during the migration, particularly if historical bank transactions have already been imported as part of the Sage conversion.
Step 6: Check the Migrated Information
Never assume that a successful migration means the job is finished.
The accounts should be checked carefully after the conversion. This may include comparing:
- Trial balance figures
- Bank balances
- Debtors and creditors
- VAT balances
- Sales and purchase invoices
- Opening balances
- Profit and loss figures
- Balance sheet figures
The aim is to make sure the Xero accounts agree with the Sage records at the chosen conversion date.
Any discrepancies should be investigated before the new system becomes the business’s main accounting record.
Step 7: Connect Other Software
Once the core accounting records are in place, you can reconnect the other systems your business relies on.
For example, this might include payment providers, ecommerce platforms, payroll systems, expense software or other specialist applications.
This is one of the opportunities presented by moving to Xero: rather than simply recreating your existing Sage setup, you can review your processes and decide which tasks could be automated or integrated.
Step 8: Train Users and Go Live
Finally, everyone who uses the accounts should understand how the new system works.
Even if the business has been using accounting software for years, Xero will have a different interface and different workflows.
Users may need guidance on:
- Raising invoices
- Entering bills
- Reconciling bank transactions
- Processing expenses
- Running reports
- Managing contacts
- Uploading documents
- Understanding the Xero dashboard
A little training at this stage can prevent mistakes and make the transition considerably smoother.
How Long Does a Sage 50 to Xero Conversion Take?
There is no single answer because every business is different.
A relatively straightforward business with clean accounts and limited historical data may be able to move across quickly. A business with multiple bank accounts, large numbers of customers and suppliers, complex VAT arrangements or several years of historical records will require more preparation and checking.
The data conversion itself may be relatively quick, but the overall project should also allow time for preparation, configuration, reconciliation, testing and user training.
Should You Move All Your Historical Data?
Not necessarily.
One of the key decisions when switching accounting software is how much history to bring across.
Having historical data in Xero can be useful because it allows you to retain information and potentially compare financial performance over time. However, transferring more data can also make the migration more complicated.
Some businesses may choose to transfer a defined period of detailed transactions while retaining older Sage records as an archive.
The right approach depends on your reporting requirements, accountant’s preferences and how you need to access historical information in the future.
Make the Move Carefully, Not Just Quickly
Switching from Sage 50 to Xero can be a valuable opportunity to modernise your bookkeeping processes, reduce manual administration and make financial information easier to access.
The key is to treat the migration as a project rather than simply a software change.
Review your existing Sage accounts, decide what information needs to be transferred, configure Xero correctly, use an appropriate migration method and thoroughly reconcile the new accounts before going live.
For businesses that are ready to move to cloud accounting, Xero provides tools for bank feeds, reconciliation, invoicing, reporting and HMRC submissions, while using the support of an accountant who understands data migration can make the move from Sage considerably easier.
Thinking About Moving From Sage 50 to Xero?
Moving from Sage 50 to Xero doesn’t have to be complicated. At Account8, we provide a professional Sage to Xero conversion service to help you make the switch smoothly and with minimal disruption to your business.
From reviewing your existing Sage data and planning the migration to transferring your accounts and checking the converted information, we can help take the hassle out of the process. If you’re considering moving to Xero, get in touch with Account8 today to discuss your requirements and find out how we can help you make the move with confidence.