Opening balances refer to the assets and liabilities your organisation has when you start using DEAR to manage your inventory. If you are currently using Xero or QuickBooks Online which you will be integrating with DEAR, then you will need to enter balances from the Xero/QBO system. If you are using DEAR without these accounting systems, you will need to enter balances from your existing accounting records. This is what we call conversion balances or opening balances.
NOTE: If you are unsure about what needs to be included in your opening balances, please consult with your accountant or bookkeeper. Transactions dated prior to the conversion date will not be disregarded.
NOTE: It is not currently possible to input customer credits carried over from other accounting systems. Standalone credit notes can be created in DEAR for these outstanding credits.
- Configure Chart of Accounts, Account Mapping and Bank Accounts.
- Users will need the Financial: Opening Balances permission to manage opening balances.
Table of Contents
- Transferring Balances
- Accounts with Special Features
- Activity Log
Transfer the balances from your previous accounting system so DEAR can seamlessly continue recording your transactions. If you have transactions in DEAR dated prior to the conversion date, they will not be disregarded.
The reports can be generated prior to the conversion balance as well.
- Navigate to Settings → Reference Books → Financials → Opening Balances.
- First, choose your Conversion date. This is the date you are going to stop using your previous system and start using DEAR. For example, if we select October 2016 as the starting date, we will need to enter opening balances into DEAR as of the 30th September 2016.
- Identify any asset accounts for Inventory or Fixed Assets by checking off the Inventory/Fixed Asset box for that account.
- Start entering all balances from your existing accounting system as of the 30th September 2016 against the same accounts in DEAR. Some accounts have special features to keep in mind - explained below.
Accounts with Special Features
Some types of accounts have special features to keep in mind when entering opening balances. These are bank accounts, accounts receivable, accounts payable, inventory accounts, and fixed assets accounts. These will have to be reconciled with outstanding purchases, outstanding sales, stock on hand, and fixed assets.
DEAR works with the bank statement lines, so there maybe be transactions in your previous system that are not yet shown on your bank statements. In this case, you will need to enter the bank statement value and include the transaction that has not gone through yet elsewhere.
Example: The trial balance from the previous system shows a balance for $1,100 in the Santander Account, but the bank statement shows the balance for that account is $1,000. This is because there has been a transaction worth $100 which has not yet come through to the bank statement.
- Enter the bank statement value ($1000) against the bank account in DEAR.
- Enter the outstanding transaction value ($100) into an Unrepresented Funds account.
- If you do not have an Unpresented Funds account, you can create one in the chart of accounts. If you are using DEAR standalone, you can do this by navigating to Settings → Reference Books → Financials → Chart of Accounts and clicking + Account. If you are using Xero/QBO, you will have to create the account in Xero/QBO and then synchronise the accounting system with DEAR.
- Unrepresented Funds required account settings: Account Type – Current Asset, System Account – None, Accepts payments.
- When the $100 appears on the bank statement, it can then be coded against the Unpresented Funds account to cancel it out.
Accounts Receivable and Accounts Payable
Accounts Receivable as of the 30th of September 2016 are all the sale invoices that are still outstanding on that date. Accounts Payable are all the purchase invoices still outstanding on that date. The value of your outstanding purchases and outstanding sales should match the accounts receivable and accounts payable totals that have just been entered on the Opening Balances tab.
- Enter balances against the accounts in the Opening Balances tab.
- For Accounts Payable, go to the Outstanding Purchases tab to enter invoices.
- For Accounts Receivable, go to the Outstanding Sales tab to enter invoices.
The total amount the balance is out by is displayed at the bottom of the screen. Ensure Balance Out By is 0 before starting to use DEAR.
Stock On Hand and Inventory
From this page, you can import an inventory list via CSV file template (to populate product records) and then import a stock on hand template (to set stock figures). The value of your stock on hand should match the inventory account debit that has just been entered on the Opening Balances tab.
NOTE: You can also add product records to your inventory manually by following the instructions in Product and Service Management - Populating your inventory. Inventory List and Stock on Hand can also be uploaded from the inventory module (Inventory → Products → Import).
This operation should only be performed when initially setting up DEAR Inventory - it should not be used to update stock balances if you already have stock figures in the system. DEAR Inventory uses actual accounting costing methods, and uploading the stock-on-hand template multiple times will create new instances of the products rather than update existing quantities. To change stock figures after the initial setup, use Stock Adjustment or Stocktake.
Import an Inventory List and Stock on Hand:
- Navigate to Settings → Reference Books → Opening Balances and select the Stock on hand tab, this is where we can enter the product record and all our quantities on hand as of the 30th of September 2016.
- Download the DEAR Inventory List template and copy and paste your inventory data into the downloaded template before uploading the new file. The column headings and heading positions must remain unchanged for the import to work correctly. If you don’t have information for some columns, they can be left blank unless they are a mandatory field.
- NOTE: The Account for the imported product will be the default Inventory account for your organisation, unless an inventory account has been specified at the product-level.
- The stock amounts must be imported into DEAR in a spreadsheet. Click Import stock on hand from CSV and download the template. Click on the + sign to see all required and optional fields. Once you have completed building your spreadsheet, simply Upload it back into DEAR.
- The stock on hand transaction will now be listed in your records. Click a stock on hand entry to edit the unit cost or account of products if required.
- If the value entered on the Opening Balances tab for inventory accounts is equal to the value of the uploaded stock on hand, the balances will match. Ensure Balance Out By is 0 before starting to use DEAR.
See more about importing your starting Inventory List and Stock on Hand in the Getting Started Guide.
If there is an amount in the opening balances for fixed assets (e.g. Office Equipment for $1000), a fixed asset or a list of fixed assets adding up to this value must be added to this tab. The value of your fixed assets should match the fixed assets account debit that has just been entered on the Opening Balances tab. Learn more about Fixed Assets.
To add fixed assets to the opening balance:
- Go to Financials → Fixed Assets tab.
- Click + Fixed Asset. Enter the Fixed Asset details (Purchase date, Purchase Value etc.) and Save your changes. Mandatory fields are marked with an asterisk (*).
- This item is now automatically registered in your fixed asset register, and you can start posting depreciation.
- If the value entered on the Opening Balances tab for accounts holding fixed assets is equal to the value of the uploaded fixed assets, the balances will match. Ensure Balance Out By is 0 before starting to use DEAR.
The Activity Log displays a lists of all actions taken in the Opening Balances section, with time/date stamps and user identification.