Do you have trouble keeping up with your small business finances? It might be time to invest in a bank feed for your business bank accounts if so.
A bank feed is an automated way to download bank transactions from your company’s bank account at the end of each day. This is a huge help for accounting and keeping on top of the work. This blog post will discuss how using one can make your life easier and why you should consider implementing one today!
The feed will show all your online banking transactions in one place ready to reconcile them.
Previously businesses would have entered transactions manually or the other option is to import transactions from the bank by using online banking.
What is Open Banking Bank Feeds?
Open Banking is a term used to describe how financial institutions are opening up their data to third-party providers. This allows for more innovation when it comes to banking products and services.
What is Bank Feeds?
It is a file that can be downloaded from your financial institution. It is updated each night with the transactions of the day, which allows for faster access to information and more streamlined processes in accounting departments.
When you log into your accounting software in the dashboard, it will show the bank position and any transactions requiring reconciling.
How Does Bank Feeds Work?
They work by connecting your bank account to accounting software. Once the account is connected, it will update the bank transactions each day. Don’t worry if you have several business accounts; it is possible to set up more than one.
Why Use Bank Feeds?
There are many reasons you should consider using a feed from the bank in your business. Here are some of the top reasons:
- Reduces daily admin and manual data entry time for bank transactions.
- Help improve accuracy and efficiency in your accounting department.
- Help you reduce the amount of time spent reconciling accounts.
- Can provide a more detailed view of your company’s financial activity.
- Help you make better business decisions by providing a real-time overview of your finances.
- It is easier to produce reports like cash flow forecasting, balance sheet, and income statement with real-time information.
Are Bank Feeds Safe?
Bank feeds are a very safe way to download your company’s transactions. The files sent to the online service or third-party provider are encrypted and password protected. In addition, the financial data is only accessible by authorized users.
How do you Set up a Bank Feeds?
An API (Application Program Interface) sets a bank feed up through the accounting software.
Each accounting software program has a list of banks that it will connect to. When you set up the bank account in the software, it will request the bank name; you then follow the login process for your online banking and choose which bank accounts you wish to connect.
It is important to enter the date you want to start downloading transactions. Most banks will only allow 90 days, although some have more.
What is an API?
API stands for Application Programmable Interface, and it allows users to interact with programs or apps without knowing how to code. Bank feeds are often delivered through APIs, which is why it is important to have a good understanding of this term if you are looking to set up an online banking feed for your business.
Which Accounting Software is Best for Connecting a Bank Account?
Bank feeds can be used with most accounting software providers.
However, cloud-based and online accounting suites are best for Bank feeds because they do not require the use of a third-party app or service to download files from financial institutions. In addition, many traditional accounting software providers have been adding Bank feed capabilities so that their customers can benefit from this technology.
There are several options for the best online accounting software, including:
FreshBooks – Great for small businesses
Zoho Books – offers a free version up to a turnover of £35,000
QuickBooks – Ideal for growing businesses and keeping track of stock
Xero – Good all-round accounting software with easy to use interface
The Advantages of using Bank Feeds and Accounting Software
When you use Bank feeds with accounting software, it can provide your business with several advantages. These include:
- Bank reconciliation is faster and more accurate
- Save time spent on data entry from the bank statements
- Accounting software will allow you to create invoices and match them to the bank feed
- Some Accounting software will support multi-currency
- Send automatic payment reminders knowing that the outstanding invoices are up to date.
- Set up multiple accounts with feeds
Although using open banking bank feeds has advantages you will still need to reconcile to the bank account. I have seen cases where duplicate transaction data is imported on a few transactions. It is rare but can happen.
If you prefer not to set up a feed, it is possible to import the online bank transactions to accounting software by downloading them.
Will I still need to Complete a Bank Reconciliation?
It is still necessary to reconcile bank accounts when you are using Bank feeds. The Bank reconciliation will ensure that the transactions in the accounting software match those on the bank statement. This process helps to identify any discrepancies and correct them. However, by using Bank feeds, you will reduce the time spent reconciling accounts.
We provide a free excel template to help reconcile the bank account.
Final Thoughts on Bank Feeds
Bank feeds are a great way to improve the accuracy and efficiency of small business owners. They can also help you make better business decisions by providing a real-time overview of your company’s finances. If you are looking for a way to automate the process of downloading bank account transactions, then bank feeds are the perfect solution.