System Implementation Reversals

As part of our onboarding process, it’s important for users to understand how certain actions, specifically the handling of journal entries during contract creation and system implementation, affect their financial statements.

What Are System Implementation Reversals?

When a contract is created, the system automatically generates journal entries to reflect the financial activity associated with that contract. However, to ensure accurate financial reporting, the system may need to reverse these journal entries for specific periods, particularly during the implementation phase of a contract.

Purpose of Reversals

• Maintain Accuracy: The reversal process eliminates the impact of any system-generated journal entries before a designated go-live date, ensuring that financial statements reflect only the relevant periods.

• Simplify Reporting: By reversing entries prior to the start date, users can avoid confusion and maintain clarity in their financial reports.

How the Reversal Process Works

Creating a Contract

• When a new contract is created, users follow the normal onboarding steps, such as setting up a contract that begins partially into a fiscal year.

• The system automatically generates journal entries for the new contract.

Performing the Reversal

• Automated Background Process: Once the contract is created, the system runs a process in the background to reverse the impact of those journal entries up to a specific point—the go-live date.

• Setting the Go-Live Date: The system automatically determines which entries need to be reversed based on the go-live date.

• Executing the Reversal: The system reverses all journal entries dated before the go-live date. For example, if the go-live date is January 1, 2025, all entries from December 31, 2024, and earlier will be reversed.

Impact on Financial Statements

• Income Statement Adjustments: Users can review their income statements to see the changes.

• Migration Reversal Entries: The system creates journal entries labeled as "migration reversal" to indicate the adjustments. Each reversed journal entry has an equal and opposite entry to ensure a net-neutral impact on financial statements.

• Entry Grouping: The system groups reversed entries by vendor or customer, making it easier to track and report multiple transactions related to a single entity.

Final Considerations

System implementation reversals ensure accurate financial reporting during onboarding. By reversing journal entries before the go-live date, the system keeps financial statements accurate and clear.

If you have any further questions or need assistance, please reach out to our support team for help regarding migration reversals and their impact on your reports.