What happens to your old financial data when you switch systems?

Losing access to historical financial data is one of the biggest worries for organisations switching accounting systems. You can migrate the data into the new system, archive it read-only alongside your live records or keep limited access to the old system, which may mean paying a “right to use” fee. P. Johnson & Son archived seven years of Sage data and shut its old system down without paying for access.

Key takeaways

• Keeping hold of your historical financial data is essential for legal and statutory reasons – and no longer being able to access it is one of the biggest fears for companies looking to change accounting systems.
• You have three main options: migrate your data to the new system, move it into a read-only archive or keep limited access to the old system.
• Keeping access to a legacy system can mean paying an ongoing “right to use” fee. Migrating or archiving the data lets you shut the old system down completely.

One of the main concerns about moving to a new accounting system is what happens to your old financial data. You can migrate it, archive it read-only or keep access to the old system. Here’s how to choose the right option.

One of the chief concerns for organisations looking to switch to a new accounting system is what happens to their old financial data once they have moved to the updated platform.

This is not an abstract or generic fear of change but a very real and concrete issue. If an auditor wants to know about something that happened in your organisation four years ago, you need to be able to get hold of that information and tell them what they need to know.

“Historical financial data is important for legal and statutory reasons,” says Kieran May, Head of Consulting at iplicit. “Companies need to keep hold of data for six years in case HMRC want to see it, while for charities, it’s seven years. There are several ways you can do it, but the key is that you need to have access to the data.”

In the latest in our series of articles about moving on from outdated systems, we look at what those ways are.

What are your options when it comes to old data?

You have three options for your old financial data: move it into your new system, put it in a read-only archive or keep limited access to the old system. Each lets you reach the records an auditor or HMRC might ask for, but they differ in cost and convenience.

You can migrate your historical data into the new system, so that you can access it as fully as you did before.

Or you can move it all into a read-only archive attached to the new system. It is still accessible but clearly separated from your live records.

Or you can keep limited, read-only access to the legacy system, though this can come with its own costs, sometimes called a “right to use” fee (which we cover in more detail in article 3 of this series). Check what the contract for your old system says about ongoing access and fees, because it may affect your decision.

How do you know which approach to take?

The right approach depends on three things: how many years of data you need to keep accessible for audit or statutory reasons, how much data there is, and the terms of your outgoing supplier’s contract. Check the contract before you sign up to a new service, not afterwards.

Don’t necessarily take advice from your old vendor, though. It has an interest in continuing to collect revenue from you, and you might be quoted exorbitant fees for a “right to use” licence that isn’t necessary.

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How it worked for one family business

Family-run property firm P. Johnson & Son wanted to upgrade because doing the accounts had become time-consuming and convoluted. Managing director Adam Johnson needed the implementation to be quick, because year-end was approaching, and wanted the firm’s existing data moved out of the old system and stored in the new one.

“We moved seven years’ worth of Sage data into the archive and produced opening balances. It was a really easy process, enabling us to shut down our old system and have no need to pay for ‘right to use’ access to get to historical information,” says Adam. The whole migration took about 10 business days, spread over just one month, and the company can still reach its data without paying for access to the old system.

This worked for P. Johnson & Son, but the right approach for you depends on your own requirements, the system you are leaving and the one you are moving to, and the contractual terms and costs attached to your historical data.

What to check before you switch

• Confirm exactly how many years of historical data you need to remain accessible.
• Check the outgoing contract for any fees related to ongoing access or “right to use”.
• Ask any prospective new supplier exactly how it handles historical data. Will it be migrated in full, archived in read-only form, or something else?

Migration shouldn’t be a worry

Losing historical data is one of the main reasons finance leaders hesitate to upgrade their accounting systems. While you won’t use it regularly, it must be available for HMRC going back at least six years.

Done well, a migration doesn’t put that data at risk. There are several ways to deal with your historical information, and the one you choose will depend on your organisation’s circumstances and requirements, as well as the options your legacy provider offers.

To see how iplicit could help you move your historical data into a new, cloud-based system, take a 3-minute tour of the software or book a demonstration.