Enter your organization's conversion balances so your starting point in Xero is correct. Use this page for guidance and tips on entering conversion balances.
Before you start entering your conversion balances
Enter your conversion balances
Conversion balances are the list of your organization's balances for the day before your organization starts using Xero. That is, conversion balances are like a snapshot of your organization's balances just before you start using Xero.
People usually get their conversion balances from the trial balance of their organization's previous accounting system.
If you have a new organization (for example, your business has just started trading), your conversion balances are likely to all be zero. Or, you may have just a bank balance and owners' balance.
Accountants and bookkeepers: You might like to think of conversion balances as one large journal that's used to bring in an organization's opening balances.
If you have recently converted your data from QuickBooks to Xero, avoid changing your conversion balances now. Your balances should be correct as part of the conversion process from QuickBooks to Xero.
- Account balances are the first step towards preparing your reports in Xero. Your reports won't be accurate until you've entered your account balances. However, you can start using Xero without entering any account balances.
- When you set up Xero, you may want to enter balances for just some accounts - many people start by entering just their bank account balance. This means they can start reconciling their bank account soon after switching to Xero.
- You or your accountant can go back and finish entering account balances at any time.
When you're ready to enter all your conversion balances, choose from 3 methods:
- Method 1: Manually enter your conversion balances
- Method 2: Import your conversion balances
This is a good method if you don't mind doing data entry. It's also a good method if you don't want to enter every account (in your chart of accounts) from your old accounting system.
How to manually enter your conversion balances
This is a good method if you're experienced with importing files or if you have a lengthy chart of accounts. You cannot import just your conversion balances - instead you need to add your conversion balances to a chart of accounts import file.
Import a chart of accounts
Before you import your chart of accounts, it's a good idea to review the accounts in your old system and remove any unused ones.
If you choose method 3, you don't need to continue with the steps on this page - your conversion specialist will finish entering your conversion balances.
Follow these instructions if you're manually entering or adjusting conversion balances.
You will need a copy of your previous accounting system's trial balance for the day before your conversion date. (For example, if your conversion date is January, use your trial balance that is dated December 31.)
How to choose a conversion date
Go to Settings > General Settings.
Click Conversion Balances.
Click Show all accounts.
Enter balances from your previous accounting system's trial balance into the debit and credit fields.
Tips for entering conversion balances
Enter outstanding sales invoices and outstanding bills (if you have any).
Conversion balances: invoices and bills
You may now want to enter comparative balances.
Find out about comparative balances
This section provides general guidance and tips for entering conversion balances. It also provides tips for some specific accounts which you need to set up correctly so Xero can create accurate reports for your organization.
Always click Save after you make any changes to your conversion balances.
- Always enter positive numbers
- Your total debits and total credits should match
- Add new accounts if you need to
- Xero helps you convert foreign currency balances
Enter debits in the Debit column as positive numbers. Enter credits in the Credit column as positive numbers.
If the trial balance from your previous accounting system has negative numbers, enter these in the Credit column as positive numbers.
When you've finished entering your conversion balances, your total debits and total credits should match. However, if they don't, Xero records an adjustment which you or your accountant can correct later.
Click Add a new line, then +Add new account if you need to add a new account to your chart of accounts.
Find out about the chart of accounts
Xero helps you convert your foreign currency bank balances and your foreign currency Accounts Payable and Accounts Receivable balances.
Click into the account balance in the debit or credit column and click Edit as Multi-currency Balance.
Enter all your other balances in your base currency.
Tips for specific accounts
- For your bank and credit card accounts, enter balances from your bank statements
- Your Accounts Payable balance needs to equal total outstanding bills
- Your Accounts Receivable balance needs to equal total outstanding sales invoices
- If you want to use tracked inventory
- Accounts Receivable and Accounts Payable balances and tracked inventory
- Combine your Sales Tax accounts
If you have reconciling bank items such as uncleared checks, enter a separate balance for these.
How to deal with uncleared checks when converting to Xero
If you have other amounts included in your Accounts Payable balance, enter these as a separate balance.
If you don't have all your outstanding bills ready to enter now, leave your Accounts Payable balance at zero. You or your accountant can come back to it later.
If you have many outstanding bills you may want to import them. This will save you data entry time. Leave your Accounts Payable balance at zero and import your bills into Xero.
How to import bills into Xero
Don't start reconciling your bank account until you have entered your outstanding bills.
If you have other amounts included in your Accounts Receivable balance, enter these as a separate balance.
If you don't have all your outstanding sales invoices ready to enter now, leave your Accounts Receivable balance at zero. You or your accountant can come back to it later.
If you have many outstanding sales invoices you may want to import them. This will save you data entry time. Leave your Accounts Receivable balance at zero and import your sales invoices into Xero.
How to import sales invoices into Xero
Don't start reconciling your bank account until you have entered your outstanding sales invoices.
Set your inventory account balance to equal the value of inventory items you want to track.
If you also have inventory items you don't want to track, consult with your accountant or bookkeeper about which account to use for this value.
If you want to use tracked inventory, we recommend you don't use tracked inventory items in the invoices and bills you enter to support your Accounts Receivable and Accounts Payable balances.
Afterwards, you can import your inventory items and enter inventory opening balances. This avoids double-counting.
Xero uses just one Sales Tax account. If you have more than one Sales Tax account you will need to combine them. That is, add together your sales tax balances.
Tips for foreign currency accounts
- Add balances for foreign currency bank accounts
- Enter Accounts Payable and Accounts Receivable balances for foreign currencies
- Enter one rate per currency as at the conversion date
If you've added foreign currency bank accounts in Xero, add the conversion balances by clicking in either the Debit or Credit column.
The XE.com exchange rate for that currency as at your conversion date is provided by default. It converts the foreign currency balance in to your base currency.
If the converted balance doesn't match your calculation of the balance to your base currency as at the conversion date, you can edit the exchange rate. Click in the Exchange Rate box and enter the rate you used on your Trial Balance or other method of calculating your balance at your conversion date.
Accounts Payable and Accounts Receivable balances can be entered in your base currency, a foreign currency, or a mix of both. To enter a foreign currency balance, click into the Accounts Payable or Accounts Receivable field, then click Edit as Multi-currency Balance.
Only the currencies you've added will display - use some or all as required. Enter the total amount of outstanding sales invoices or bills you have in each currency on your conversion date. The balance can be positive or negative representing outstanding sales invoices, bills or credit notes respectively.
If the converted base currency amounts don't match your calculation of outstanding invoices and bills in your base currency, you'll need to edit the exchange rate. Click in the Exchange Rate box and enter the rate you used on your Trial Balance or other method of calculating your balance at your conversion date.
When you save your balances, you'll need to add the unpaid sales invoices, bills or credit notes (or unpaid portions) in each currency to make up the balances in each currency.
Click on the + icon to expand each currency, then enter the required sales invoices, bills and credit notes to make up the balance in that currency.
You can only enter one exchange rate per currency. For example if you have several bank accounts using the same foreign currency, each bank account would use the same exchange rate at conversion.