When a company migrates to Microsoft Dynamics 365 for Finance and Operations from a legacy ERP solution, one of the important data migration tasks is the creation of opening balances in the new system. This process is moving the financial balance to Dynamics 365 for Finance and Operations, which represents the base of organization financial reporting, so that the opening balance must be executed properly to ensure it is audit-compliant and matches customer reporting requirements.
The opening balance building blocks consist of four main blocks, which are customer requirements, sub-ledgers, trial balance, and validation and reconciliation:
- Customer requirements: Identifying customers’ business to-be relates to sub-ledgers posting profile setup, design of COA and financial reporting dimensions, in addition to master data mapping between legacy systems and Dynamics 365 for Finance and Operations.
- Sub-ledgers: The sub-ledgers are vendors, customers, banks, fixed assets, and items. The sub-ledgers are linked to the COA through the posting profile setup.
- Trial balance: The trial balances (general ledger accounts) consist of the balance sheet and income statement accounts. Balance sheet accounts represent the balance sheet report, which denotes the company financial position. Balance accounts move their balances from one year to another. Profit and loss accounts, which represent the income statement results and do not move to another year, are the base of the income statement report, which denotes the operational result for a specific period.
- Validation and reconciliation: The balance of sub-ledgers (vendors, customers, banks, fixed assets, and items) must equal the balance of the corresponding general ledger accounts (trial balance), with respect to the financial dimensions (business units, department, and purpose) balance, if it is used through submodules. The controllership and consulting team should finalize the validation of the design and deployment of the financial dimensions and the account structure that is required to be activated, before posting the opening balance.
In order to ensure accuracy in your Microsoft Dynamics 365 for Finance and Operations opening balances, it is important to take a systematic approach during the implementation phases begun in the analysis phase and moving from the design phase to the development and deployment phase. The following approach of the opening balance upload is divided into three main activities. The first activity consists of planning and designing the opening balance tasks, identifying master data changes between the legacy system and Dynamics 365 for Finance and Operations by performing master data mapping, agreeing on the opening balance posting date, and assigning roles and responsibilities. The second activity is executing the migration of data for trial balances and sub-ledgers. The third activity is the validation and reconciliation of the general ledger, sub-ledger, and financial dimensions.
In this section, we will lay out the process and the elements involved in creating new opening balances in Microsoft Dynamics 365 for Finance and Operations:
