Opening balance migration is one of the most confusing topics for beginners in bookkeeping and accounting - especially when records are coming from Excel or incomplete books.
If you’ve ever asked questions like:
- Why is my opening balance not balancing?
- Where do I post unrecorded receipts?
- What is opening balance equity?
- Why doesn’t my cash agree after migration?
This guide will answer all of that in simple, practical terms.
Watch the Video First
What Is an Opening Balance?
An opening balance is the value of an account at the start of a new accounting system or period.
When a business moves from:
- Excel → accounting software
- Manual records → digital system
- Old software → new software
…the balances in the old records become the opening balances in the new system.
What Is Opening Balance Migration?
Opening balance migration is the process of transferring balances from old records (usually Excel or incomplete books) into a new accounting system as at a specific date.
This includes:
- Cash and bank balances
- Customer receivables (debtors)
- Supplier payables (creditors)
- Inventory
- Fixed assets
- Loans
- Capital and retained earnings
The Importance of a Cut-Off Date
The cut-off date is the last day of the old system and the starting point of the new system.
Example:
- Cut-off date: 31 December 2024
- Opening balances entered: As at 1 January 2025
- New transactions onward for the period: 1 January 2025 to 31 December 2025
Without a cut-off date:
- Transactions may be duplicated
- Some balances may be missed
- Reports will be unreliable
Why Excel Records Often Don’t Balance
Most Excel records are incomplete, meaning:
- Some receipts were never recorded
- Some payments are missing details
- Capital was not properly tracked
- Profit or loss was never calculated
So when you list balances from Excel, this often happens:
Assets ≠ Liabilities + Equity
This difference must be handled correctly.
What Is Opening Balance Equity?
Opening Balance Equity is a temporary equity account used during migration to absorb differences caused by incomplete records.
It represents:
- Past profits or losses not recorded
- Unidentified owner contributions
- Unclassified receipts or payments
- It is NOT income and NOT an expense.
Where Do Suspense and Unrecorded Accounts Go?
During opening balance migration:
| Item | Where it goes in COA |
|---|---|
| Suspense Account | Equity |
| Opening Balance Equity | Equity |
| Unrecorded Receipts | Equity |
| Unrecorded Payments | Equity |
These accounts are temporary and should be cleared later once details are identified.
Simple Example (Excel to Software)
Excel balances as at 31 Dec 2024:
- Cash: ₦200,000
- Receivables: ₦100,000
- Payables: ₦70,000
- Capital: ₦150,000
Check:
- Assets = ₦300,000
- Liabilities + Equity = ₦220,000
Difference = ₦80,000
✅ This ₦80,000 is posted to Opening Balance Equity to make the books balance.
Common Mistakes Beginners Make
❌ Posting differences to income
❌ Guessing capital figures
❌ Ignoring receivables and payables
❌ Migrating without a cut-off date
❌ Leaving suspense balances permanently
Best Practice for Opening Balance Migration
- Fix a clear cut-off date
- List balances as at that date
- Enter all assets and liabilities first
- Post differences to Opening Balance Equity
- Review and clear suspense accounts later
- Never distort profit at migration stage
Watch the Full Practical Walkthrough (YAPBooks)
This article explains the theory, but opening balance migration is best understood practically.
Watch the full step-by-step video walkthrough on YouTube, where I demonstrate:
- Migrating balances from Excel
- Handling incomplete records
- Posting Opening Balance Equity
- Clearing suspense accounts
- Doing it correctly inside YAPBooks
🔗 Watch the full Opening Balance Migration tutorial on YouTube
https://youtu.be/H3ReEEjJIYI?si=t2pd1zxotZ6ZJM03Final Thought for Beginners
Opening balances are the foundation of your accounting system. If they are wrong, every report after that will be wrong. Learn it once, learn it properly, and everything else becomes easier.