Reckon to Xero Migration: The Steps and Where It Gets Complicated

The short answer

A Reckon to Xero migration follows the same path every time: confirm which Reckon product you are on, choose the conversion date, tidy the Reckon file, map the accounts, classes, items and tax codes, decide how much history to bring, move the balances and open items, then check Xero against Reckon before you switch. The move itself is the quick part. The time goes into the decisions and the checking.

Most migrations go smoothly. The ones that do not usually fail in the same few places: a long list of jobs that does not fit into Xero tracking, stock items Xero handles differently, tax codes that do not land on the right BAS labels, payroll moved mid-year, or a file so old and so large that nobody is sure what is still in it. This guide walks through each of them so you know where to look.

First, which Reckon are you on?

"Reckon" covers more than one product, and the first question in any move is which one you have. The answer changes how the data comes out and what comes out with it.

• Reckon Accounts Desktop. The software installed on your own computer or server, in editions such as Accounts Business and Accounts Enterprise. It began life as the Australian version of QuickBooks, which is why its menus and lists will look familiar to anyone who has used QuickBooks Desktop.
• Reckon Accounts Hosted. The same desktop software, run on servers that Reckon manages and opened over the internet. The company file has the same structure as the desktop version, but you reach it differently, and a file moved onto Hosted cannot be moved back.
• Reckon One. Reckon's cloud product. It is a separate system with its own structure, not the desktop software online.

Reckon still supports all three, so there is no deadline forcing the move. The reason to move is usually that the business wants Xero's bank feeds, its connected apps, or simply the same system as its accountant. That gives you time to plan the move properly rather than rush it.

Five decisions to make before anything moves

1. The conversion date. The start of the financial year (1 July) is cleanest. The start of a BAS (Business Activity Statement) quarter is the next best, because each activity statement then comes from one system.
2. How much history. Opening balances only, balances plus open invoices and bills, or several years of transactions. Every year you bring has to reconcile in Xero.
3. One Xero organisation or several. Xero works on one organisation per legal entity. If you run a company and a trust in separate Reckon files, they stay separate in Xero.
4. What replaces classes and jobs. Xero tracking categories, Xero Projects, or a job management app connected to Xero. This has to be settled before mapping starts.
5. Payroll now or at 1 July. Moving payroll mid-year is possible, but it is the riskiest part of the move. If you can wait for the new financial year, it is simpler.

The migration steps, in order

Here is the order a Reckon to Xero migration has to follow. Skipping ahead, for example connecting bank feeds before the accounts are mapped, creates rework later.

1. Review the Reckon file. Which product, edition and version, how many company files, how large they are, whether any have been condensed, and which features are in use: classes, jobs, items, inventory, payroll and custom tax codes.
2. Tidy Reckon up to the conversion date. Reconcile every bank and credit card account. Clear out invoices and bills that are not really owed. Make inactive the customers, suppliers, items and accounts nobody uses.
3. Design the Xero chart of accounts and map Reckon to it. Every Reckon account needs a home in Xero, and accounts receivable, accounts payable, GST and retained earnings must land on the matching Xero system accounts.
4. Map classes, jobs and items. Decide where each class, each customer job and each item type goes in Xero.
5. Map the tax codes. Each Reckon tax code to a Xero tax rate that reports to the same BAS labels.
6. Set up Xero. Organisation details, financial year, GST basis (cash or accrual, the same as Reckon), BAS frequency, tracking categories, and users.
7. Bring across the data. Customers, suppliers and items, then the opening balances, the open invoices and bills, and any history you chose to keep.
8. Check Xero against Reckon. The trial balance at the conversion date, the aged receivables and payables, the bank balances, the stock value and a GST report for the same period should all agree. If they do not, find out why before going further.
9. Connect the rest. Bank feeds, payroll, and the apps that used to feed Reckon: point of sale, ecommerce, job management, expense tools.
10. Switch, then close the first month in Xero. Stop entering into Reckon at the conversion date and keep it, read only, for the records. Treat the first month end and the first BAS in Xero as part of the migration, not as business as usual.

Where it gets complicated: classes and jobs into Xero tracking

Reckon Accounts gives you two ways to slice the numbers. Classes split income and costs by department, location or property. Jobs sit under customers, so every bill, timesheet and invoice can be tagged to a Customer:Job and its profit reported on its own.

Xero works differently. It has tracking categories, and an organisation can have two active tracking categories, each with up to 100 options. That is plenty for most class lists. It is rarely enough for jobs.

• A short class list, such as three branches or five departments, usually becomes one Xero tracking category with an option for each class.
• A long job list does not belong in a tracking category. A builder with four hundred jobs in Reckon would run out of options in a single year. Jobs usually move to Xero Projects or to a job management app connected to Xero. Xero Projects is only included in the Ultimate plans in Australia, so check the plan before relying on it.
• Both at once means deciding which matters more for reporting, because each transaction line can carry only one option from each tracking category.

Here is what getting it wrong looks like. A business moves its classes into one tracking category and its jobs into the other, then finds in month three that it has hit the option limit on jobs. New jobs start going into a catch-all option called "Other". By the end of the year, job profit reports in Xero are useless, and the history in Reckon no longer lines up with what is in Xero.

Where it gets complicated: items and inventory

Reckon Accounts has a rich items list: inventory parts, non-inventory parts, services, other charges, groups, and in some editions inventory assemblies that build one product from several components. Each item carries its own income account, expense account and tax code.

• Service and non-stock items come across to Xero as untracked items. The main work is checking each one still posts to the right accounts and tax rate.
• Inventory parts become tracked items in Xero. The quantity on hand and the average cost at the conversion date have to agree with the inventory balance on the balance sheet.
• Assemblies and groups have no direct match in Xero's built-in inventory. A business that builds products from components usually needs an inventory app alongside Xero, and that decision changes what is brought across.
• Old items. A file that has run for years often holds thousands of items nobody sells any more. Bringing them all across makes Xero harder to use from day one.

Where it gets complicated: tax codes and BAS labels

Tax codes are the part of a migration most likely to be wrong without anybody seeing it. A wrongly mapped code raises no error. The invoices look fine. The BAS is simply wrong, every quarter, until somebody checks.

Standard codes. Reckon uses codes such as GST and FRE on sales, NCG and NCF on everyday purchases, CAG and CAF on capital purchases, INP for input-taxed sales and EXP for exports. Xero has equivalents for each, under different names. Each one has to report to the same BAS labels it did in Reckon: capital purchases to G10, other purchases to G11, GST-free sales to G3, exports to G2.

How Reckon builds the BAS. In Reckon Accounts, someone chose which tax codes feed each BAS label, often years ago. If that set-up was ever changed, or was never quite right, the BAS you have been lodging may not match what the codes suggest. Find out before mapping, not after.

Custom tax codes. Many older Reckon files carry codes somebody created for one purpose: imported goods, a private-use split, a supplier set up wrongly. Each needs a decision: map it to a standard Xero rate, create a matching rate in Xero, or retire it.

Where it gets complicated: payroll and Single Touch Payroll

Payroll is the part of the move with the least room for error, because mistakes reach your employees and the ATO (Australian Taxation Office) directly.

At 1 July, the change is straightforward. Reckon finalises the old year, and Xero starts the new one. Mid-year, every employee's year to date earnings, tax, super and leave balances have to carry into Xero exactly. The change also has to be reported through Single Touch Payroll (STP), the way payroll is reported to the ATO each pay run.

If that report is missed, the ATO sees two payroll systems reporting for the same employees. Each employee then sees two income statements for the year, and the business appears to have withheld more tax than it did. Untangling that takes longer than the migration itself.

Where it gets complicated: large, old and condensed files

Many Reckon files have been running for ten or twenty years, often since the business first used QuickBooks. Reckon itself treats Accounts Business files of a few hundred megabytes as large, and long-running files are often well past that.

• Condensed files. To keep an old file usable, many businesses have run Reckon's condense or clean-up tools, which summarise older transactions. That is fine for day to day work, but the detail for those years may no longer exist in the file. If you need it in Xero, it may have to come from an older backup, or not at all.
• Lists that never stopped growing. Customers, suppliers, items and accounts added over decades, many duplicated with slightly different names.
• Old mistakes. Unreconciled bank items from years ago, invoices that were never paid or written off, and balances nobody can explain. Each has to be cleared or brought across as a known list, or the first Xero reconciliation will not balance.

The decision on history matters most here. Bringing fifteen years of a condensed file into Xero rarely helps anyone. One or two years of detail, plus the old Reckon file kept read only, usually serves the business and its accountant better.

Where it gets complicated: several Reckon files into Xero

Many businesses have more than one Reckon company file.

• One file per entity. A trading company, a property trust and a family partnership, each in its own file. These become separate Xero organisations, because each has its own ABN (Australian Business Number) and its own BAS. Loans between them must still agree on both sides after the move.
• One file per period. Some businesses started a fresh Reckon file when the old one became too large or too slow. These belong to the same entity, so they can become one Xero organisation, but the lists usually drifted apart and have to be brought onto one list first.
• One file per branch. Two branches of the same company in separate files can be merged into one Xero organisation, with a tracking category for the branch so each can still be reported on its own.

Xero reports on one organisation at a time, so a group of entities needs a separate plan for combined reporting, such as a reporting dashboard.

What an automated conversion covers, and what it does not

Xero subsidises a basic automated conversion from Reckon through a conversion partner, and for a simple file it can be all you need. It moves the chart of accounts, contacts, balances and a period of history much as they are.

What an automated conversion cannot do is make the decisions in this guide. It copies the accounts and lists you have rather than the ones you want, it maps tax codes by name rather than by the BAS labels they feed, it cannot decide what your jobs should become, and it converts one file at a time. If your file is tidy, has one entity, no payroll mid-year, no assemblies and only standard tax codes, try it. If not, plan the decisions first, then decide who does the move.

Xero is not the only destination. Some businesses leaving Reckon are better suited to MYOB, particularly those already used to a desktop style of working. The same decisions apply, and our Reckon to MYOB migration service covers that move. If Reckon stays for now and you need it talking to other systems, see Reckon integration. Once you are on Xero, Xero integration covers connecting it to the rest of the business.

If any of these apply, our Reckon to Xero migration service covers the planning and the move at a fixed price, quoted before work starts. For what Xero can do once you are on it, see our Xero services. We work with businesses across Australia, from Perth to Sydney, Melbourne, Brisbane, Adelaide, Canberra and Hobart.

Questions about moving from Reckon to Xero