In part two of his article on automatic bank feeds, Ian Vickers urges you to utilise the functionality offered by your accounting software
In my last article (Accounting Practice, Spring 2017), I reviewed the pros and cons of using automatic bank feeds software, given changes in the market for these services and the inherent risks in the screen-scraping techniques used by some service providers.
In this article I want to explore using features that should be available in good accounting software to remove or at least significantly reduce the need to import bank transactions.
Accounting software should offer three essential ways to enter transactions: manually, scheduled and data import. Of course, automatic bank feeds is a specific example of data import. Depending on the nature of a business’s activities, a combination of these can be used to enter banking transaction efficiently without the need to subscribe to additional bank-feed services.
For businesses that process customer and supplier invoices, when the payment date is known (e.g. agreed terms, paid by credit card, BACS or scheduled payment), with just a few more clicks the payment can be posted at the same time the invoice is posted. Prelude Accounts offers this functionality.
With regular payments and receipts (i.e. direct debits and standing orders), bank transactions can be anticipated and so entered in advance on a defined schedule. For example, outgoings such as rent, business rates, mobile and broadband fees can easily be anticipated in advance. We will soon be refining these features within Prelude Accounts.
I would be surprised if there are many (if any) retail banks that do not offer an online banking facility. Those that do will probably also include a facility to download transactions in a useable data format, for example CSV. Good accounting software will offer import/export of transactions. Surely it makes sense to utilise these features offered by banks and accounting software. Effectively it will replicate the so-called ‘unique’ selling point of automatic bank feeds and importantly it will do so without violating your or your clients’ banking terms and conditions (see previous article).
Of course, as I have said before, it remains vitally important not to mistake importing bank transactions, manually or automatically, with bank reconciliation. The former can be optimised with such features as described above, but care must still be taken as it is easy to duplicate or enter wrong transactions. Bank reconciliation will identify this and could thereby help to identify process improvements; it is a key business control (to confirm that you and your bank agree on how much of your hard-earned money the bank holds) and should not be automated. In fact it cannot be automated, as the moment it is automated, it ceases to be a business control as no actual oversight or interrogation is undertaken.
With MTDfB being inevitable in some form or other at some time or other, accountants must engage with all their clients to use accounting software effectively. This is essential to ensure that the proposed increased frequency of reporting to HMRC does not result in significant increased work for the accountant, the full cost of which could not be passed on to clients.
Take this as an opportunity to review processing of bank transactions with your clients. I think you will find that the best approach will be to use the time-saving and regular/scheduled features of your accounting software combined with CSV import to its bank reconciliation feature. It is a matter of finding the best balance of processes with your clients, depending on their business needs and competences and being mindful that, with cloud-based software and online banking, the workload can be shared between clients and accountant.
Check out the features that your accounting software provides, understand it and ensure that it will work for you, and share this knowledge with your clients.
Notwithstanding all the above, I acknowledge that there will be some circumstances – client business type, accountant/client preferences and competences, unwavering desire to automate everything that moves – for which automated bank feeds is a must. With the removal from the market of Bankstream (their ‘bank-authorised data feeds’ having been acquired by QuickBooks), along with our aversion to the use of screen-scraping techniques for well-documented reasons, we are looking to partner with a service provider named OCRex. Watch this space…
- Ian Vickers is Managing Director of Diamond Discovery Software. Call 01656 725800 or email firstname.lastname@example.org
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