Data Analysis Facilitates Successful File Conversion

File conversion is a time consuming but necessary step to fixing many problems in a QuickBooks data file. Assessing the health of the file through data analysis can help determine if a file conversion is necessary or can be avoided by implementing other solutions. Data analysis can also help establish if any clean up procedures are need prior to file conversion work. This article looks at data analysis as an initial step in the file conversion process.

Data Analysis Overview

Data Analysis is a vital part of assessing the health of the QuickBooks data file. There are many times that this type of analysis is appropriate. Data analysis can be done annually by the client to discover any issues prior to year-end processes. Accountants and consultants may do data analysis after receiving the QuickBooks data file from the client to gain familiarity with the file before beginning training, consulting, or other work. Data analysis is also recommended any time there seems to be something unusual happening in the file. This proactive approach provides valuable information for all who use the QuickBooks data file.  Armed with the information of what is working and what is not, data analysis can lead to discussion of various situations which need to be resolved in the file with many possible solutions, including the determination that a file conversion project is necessary. 

The data analysis can be accomplished many different ways.  For those consultants with extensive experience, they may be able to simply look at the file and determine what needs to be done.  For most of us, however, we need a more consistent approach to help ensure that we don’t forget critical issues.  A chapter of The Sleeter Group’s Consultants Reference Guide is devoted to data analysis.  In our business, we use our Small Business Diagnostic Tool – QuickBooks Edition as a way of working methodically through the QuickBooks file and to document my finding. 

No matter how the data analysis work is completed, it is a good idea to systematically review the QuickBooks data file to know what issues need to be addressed immediately and which issues are of secondary importance.

Data Analysis and File Conversion

Good data analysis begins with examining the QuickBooks data file in detail.  The steps vary depending on the knowledge of the file by the person performing the analysis as well as the features available within QuickBooks that are being used by the client.  If the client is using all of the areas of QuickBooks including payroll, job costing, etc. our analysis covers approximately 170 issues broken down into about 20 topics.  While this is obviously more extensive than we have time to address in this article, we will cover some of the most common discoveries that lead to a decision to complete file conversion work. 

First are the general health characteristics of the file.  In this area, we take a “big picture” approach.  Issues addressed can include file size, list size and data integrity. If a situation is discovered in this area, it is not a forgone conclusion that data file transfer procedures will be required.  For example, in some cases, a large file size may not have performance issues which require immediate attention and/or the condense functionality included in the QuickBooks software may help to reduce the file size.  If the problem is with file size and no other alternative is appropriate, you may decide to start a new file, import the beginning balances, and transfer the transactions for a specific time period. Although time  consuming, the result of a smaller, faster, healthier file makes it all worth the challenges.

No matter what issues are found, it is important to thoroughly investigate all alternatives prior to making the decision that the serious problems require a file conversion project to fix the file. 

After scrutinizing the file health in general, the next step is typically a Balance Sheet approach.  By examining the accounts on the Balance Sheet to determine if they are accurate and well maintained other critical issues will be discovered.  In addition to review of the accounts themselves, carefully reconcile the balances with any supplemental reports.  While each client’s Balance Sheet is unique, the most common issue we see is related to inventory: most challenges are either the result of an incorrect decision to use inventory by the business in the first place and/or incorrect procedures used by the client.  While this issue creates the some of the most complicated, time-consuming file conversion projects we have encountered, it is often the only viable alternative to unravel the situation.

In addition to determining if the balance is correct, data analysis will help you determine if any cleanup work is necessary.  The cleaner the file before the file conversion project begins, the easier it will be to reconcile the data between the two files at the intermediary points as well as beginning and ending balances. 

If there are specific issues with the data which are part of the reason for the file conversion, be sure that the results between the two files can be reconciled effectively and efficiently.  A common example is switching from inventory to non-inventory.  As long as the item names are exactly the same, for example, the type can be changed prior to the import and the transactions will still transfer. The impact on the inventory asset and cost of goods sold for individual invoices and bills, however, will import based on the item set up in the new file: as an item is purchased it is expensed, as an item is sold, the income is recognized.  This creates some challenges in reconciling the old file with the new.  It does not make the process impossible, but additional thought and reconciliation procedures will be required to ensure that the results are consistent.

Structuring the Engagement

It is strongly recommended that the project be broken down into distinct phases.  The data analysis would be the first.  Cleanup work can be the second part of the project.  For each phase, the recommendation is that it is done as a separate engagement, distinctly segregated from the conversion work with a  specific fee for those services, communicated timing and client review prior to the conversion project. Another part of the process which should be kept separate is any subsequent clean up, training, and/or consulting services.

Summary

Data Analysis and Data File Conversion are two crucial tools QuickBooks software consultants use to assess and fix problems in data files. These two processes can work hand-in-hand to guarantee a successful file conversion. Data Analysis helps determine if there are solutions other than file conversion. It can also point to major issues that should be eliminated before creating the new data file.

Bonnie Nagayama has been focused on supporting Accountants and their QuickBooks Accounting Software clients with practical solutions for financial and day-to-day operational issues since 1992. For more ideas on how to use data file analysis as a marketing tool, download a free 25+ page eReport from http://4luvofbiz.com/

For more information on file conversion work including an in depth look at the tools and step by step procedures on August 20; common pitfalls when completing a file conversion project on August 27; or case studies of actual client experiences on September 3, consider attending a Sleeter Group webinar.  More information can be found at http://www.sleeter.com/webinars/index.html