Business Central System Cutover

The purpose of system cutover is simple: create an environment where a business can rely completely on a new business application and STOP using the old system. System cutover can be a stressful time as it typically happens during month-end. Accounting teams must juggle their month-end close priorities while also dealing with the responsibilities associated with cutover. System cutover or “go live” can only occur after implementation has been carefully planned, documented, and tested, and end-users have all been thoroughly trained on how to use the new system. This process has multiple steps that occur during the first month of using a new system and culminates with issuing financial statements from the new system the following month.

On the surface, this concept seems simple however it is much more complex. The reason cutover is so complex is because of the specific sequence of events that must happen for a successful cutover. Here is a list of common scenarios and how a system cutover addresses each one:

1. My financial statements have a YTD, prior YTD, and rolling 12-month calculation on them. How will I generate these statements in my new system? A normal cutover addresses this issue by importing one journal entry per month that summarizes the net change to each G/L account for the prior 2 – 3 years. In some cases, read-only access to the “old system” is retained for inquiry purposes.
2. I have 500 customers with unpaid invoices that were entered into the old system before cutover. How will I apply cash receipts to these unpaid invoices in the new system? These transactions are either imported or entered manually into the new system. Posting is disabled since the financial activity related to these invoices is already contained in the financial detail obtained in step 1. At completion, the new system’s Aged Accounts Receivable report should balance to the A/R GL balance.
3. I have 500 vendors with unpaid invoices that were entered into the old system before cutover. How will I pay these invoices in the new system? This process is identical to step 2.
4. I have multiple uncleared checks and deposits in transit from my last bank reconciliations in my old system. How will I perform bank reconciliations in the new accounting system? Establishing checkbook beginning balances differs from system to system, but the process always involves establishing a cutoff date for bank transactions in the old system, performing reconciliation, and entering all of the uncleared checks and deposits in transit into the new system with posting disabled, since the financial details are already contained in step 1.
5. My company has 1000 SKU’s and over $1M in inventory in our warehouse. How will cost layers be reflected in my new system? What about lot numbers, serial numbers, and expiration dates? Inventory cost layers must be created in the new system. Depending on the valuation method, the procedure can vary. If on FIFO, LIFO, or Standard Cost a detailed inventory valuation report should be pulled from the old system with the receipt date, cost, and quantity remaining listed. This report is either imported or manually keyed into the new system. This report should also contain all applicable lot numbers and serial numbers. Once complete, the inventory valuation report in the new system should balance the inventory G/L account(s).
6. We have multiple purchase orders in the old system that have not yet been received and multiple sales orders in the system that has not yet been shipped. These transactions must be imported or keyed into the system manually by end-users. A report showing the remaining quantities and costs on each transaction must be pulled from the old system.
7. I have a large number of purchase orders that have been received but not yet invoiced. How will I receive these PO’s in the new system? Many systems have a report shows shipments received but not yet invoiced. The remaining quantities to receive will be entered in step 6, but the quantity received and not yet invoiced must be handled differently. A placeholder receipt should be put into the system that can be matched against, and the corresponding inventory and G/L activity should be backed out or deleted.

The result of all these processes results in a carbon copy of the “old system” at the end of the month before cutover begins, and the business to continue operating with little to no interruption on day 1 of using the new system.

Here is a sample cutover plan for January 1, 2021, for a customer using core financials and has a 10-day month-end close process.

Last business day in December (BD – 1):

1. Issue all payments from the old system
2. Post all cash receipts from the old system.
3. Perform a final reconciliation of all checkbooks in the old system. Set aside the list of UNCLEARED bank transactions.

BD 1 thru BD 3:

1. All December AP must be entered into the OLD system
2. All December AR must be entered into the OLD system
3. Post all month-end close journal entries (e.g., depreciation, accruals, etc.)

BD4:

1. Enter all UNCLEARED bank transactions into the new system from recs performed on BD – 1.
2. Enter or import all open AP into the new system using the Accounts Payable Aging report from the old system. Tie out to AP aging in the new system to AP aging in the old system.
3. Enter or import all open AR into the new system using the Accounts Receivable Aging report from the old system. Tie out to AR aging in the new system to AR aging in the old system.
4. Begin processing January transactions in NEW SYSTEM.
5. Do not enter any new AR or AP into the old system. If you must, the transactions must be processed in BOTH old and new systems.

BD10:

1. Issue December statements from the old system.
2. Enter or import monthly journal entries to record G/L activity (required to produce financial statements).
3. In the new system tie out AP, AR, and Checkbook sub-ledgers to G/L.

BD 10 (the following month):

1. Issue financials in the new system
2. Relax, and enjoy the fruits of your team’s labor 😊