Would this save hours of your time?

Would this save hours of your time?

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Hi everyone!

I am currently in the process of developing a software program that pulls data directly from a client's bank account, automatically codes it and allows the user to report on the data. The software will be very secure and the data is provided by a business that is regulated by the SEC in America and follows all the normal regulations here in the UK such as PCI standards. The user simply enters their online banking details once and the data is pulled over every day (certain accounts require the user the enter an online banking security pin on each update). The idea is to create a tracking tool for those clients who will never maintain an Accounting system or who will never pay their Accountant to maintain one for them.

I would really appreciate some thoughts on this from Accountants in industry as I am currently at the stage where I need to invest significant funds!

Thanks in advance!

Replies (20)

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By andy.partridge
17th Apr 2014 22:38

What about?
VAT?

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David Winch
By David Winch
18th Apr 2014 08:46

Automatic coding
Is it your intention that the coded bank deposits & withdrawals should form the basis of accounts & tax returns without the need for an external accountant?

If so I see a danger because the nature of an expense will depend upon the nature of the underlying business. What may be drawings in one business may be purchases for resale or legitimate business expenditure in another and of course capital expenditure may give rise to tax allowances (or not).

David

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By WhichTyler
18th Apr 2014 08:53

Congratulations!

You seem to have invented Xero...

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RLI
By lionofludesch
18th Apr 2014 09:07

Machines aren't that smart

I'm wondering whether it wouldn't cost me time.

Machines aren't smart enough to deal with something out of the ordinary.

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Man of Kent
By Kent accountant
18th Apr 2014 10:25

Established players

I think you'll find this a market which is already catered for, either with cloud based software which already allows bank data to be imported and quickly coded - Xero, ClearBooks etc.

Bankstream are already doing what you are developing.

So you'll have stiff competition.

Is the competition something you have considered?

Plus the process you will need to go through to get bank approval and possibly approval by accountancy bodies to give your product credibility.

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By loguie668
18th Apr 2014 21:23

Thanks.

Thanks for your input guys!

 

The idea though is to create a simple tool to allow small businesses to track the money flowing in and out of their business with little or no input from themselves and this forms a value added tool that the Accountant can offer their clients. The bank reconciliation tool has been included as an added benefit for the Accountant so that they can make use of the bank data to produce reports including year end Accounts just like a bank summary may be produced on Excel or Xero.

With regards to accuracy, we have around 98% accuracy from the tests we have completed thus far. Of course there will be transactions that may be out of the ordinary, and the Accountant would need to quickly review the bank account prior to using the analysis. But surely there is still big time savings here, as well as engaging those clients who aren't overly responsive?

Bankstream is a competitor but they have only got three banks on board, we would have over 60. We wont need bank approval as we will be getting the data from a third party intermediary.

 

Your opinions are all very valued and if you still have the same feelings after my response I may have to reconsider. Thanks again!

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Replying to carnmores:
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By cbp99
19th Apr 2014 09:46

third party intermediary

loguie668 wrote:

Bankstream is a competitor but they have only got three banks on board, we would have over 60. We wont need bank approval as we will be getting the data from a third party intermediary.

I expect I am very naïve, but which third party intermediary would have (for example) my bank data?

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Replying to carnmores:
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By shaflidason
25th Apr 2014 15:00

I expect he is referring to a third party such as Yodlee, who provide software that knows how to log in to various banks' systems. You give them your account details, including your 'memorable information' and their software will log in as you once a day and fetch any new transactions.

The reason why they don't need to be in partnership with the banks per se is that the software is emulating a regular user using a browser, clicking buttons, filling out forms etc.

There are of course major trust and security issues here.

To answer your question, no 3rd parties should have your data unless you have given them your full login details and explicit permission to fetch your records on your behalf.

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Replying to carnmores:
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By cbp99
26th Apr 2014 13:58

.

cbp99 wrote:

loguie668 wrote:

Bankstream is a competitor but they have only got three banks on board, we would have over 60. We wont need bank approval as we will be getting the data from a third party intermediary.

I expect I am very naïve, but which third party intermediary would have (for example) my bank data?

I'll carry on waiting for OP's reply to my question.

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By DMGbus
18th Apr 2014 22:50

Features lacking with existing suppliers (eg. Xero)

So far as I am aware none of the existing suppliers of Xero-like systems go beyond what are in effect bookkeeping and management accounts to produce the following really useful "extra mile":

Statutory accounts for UK Ltd Co'siXBRL accounts for Corporation Tax purposes

I suspect that people like Xero either have the above on a "wish list" or see no money in it (ie. development costs outweigh what they see as the potential extra income).

I am aware that Xero can already produce New Zealand statutory accounts, but what I need is UK statutory accounts plus iXBRL, then I'd look forward to being able to say goodbye to substandard and overly complicated accounts products such as Sage Accounts Production Advanced (SAPA for short, pronounced as "TRASHA" [or worse] by some of those who are new to it).

 

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By User deleted
19th Apr 2014 00:06

For simple accounts ...

... FreeAgent links straight in to IRIS, as too I presume will Kashflow, from which stat accounts and ixbrl/ct600's are a doodle.

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By Sheepy306
19th Apr 2014 01:59

Pricing
@ OP - what is the anticipated pricing for this? Bearing in mind Xero charge say £10 a month for a fully blown package, exporting bank transactions into an Excel csv file is free, presumably as your product simply exports and does same basic grouping of transactions into categories you'd be looking at a few quid a month? If so then perhaps you may get a few customers, for example I have a few artist clients who will never ever use an accounts package but they would like to use something very very simple that doesn't involve completing an Excel template. Would it save me a lot of time? Not a lot, I'd still need to correct a lot of the entries as I believe it is virtually impossible to categorise some expenditure. E.g. That bank payment at Nando's, was that subsistence, entertaining or drawings?

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By johnmccay
19th Apr 2014 11:07

Sounds good

Any tool to ease the pain of bank account analysis would be most welcome. We currently use Autorec for scanning bank statements however a tool like this would make the process even more straight forward. I look forward to hearing more...

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Replying to Wanderer:
By Karen Bennett
03rd Jun 2014 15:53

Thanks John for the endorsement.

AutoRec is another accounts preparation software solution on the market for anyone looking for a solution.  

It is typically used by accountants in practice for VAT analysis for incomplete records or 'shoebox' clients. It’s not for every client but it does save accountants a massive amount of time. AutoRec has been on the market for just 2 years with almost 1,000 accounting practices subscribing to the software.

I know from past research that clients don’t like to give there bank details to any third party? Also AutoRec can also sort by date, transaction details, account code etc. There is a specific export for accounts software systems such as Xero, Sage, VT, IRIS, Digita and many more...

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By loguie668
24th Apr 2014 19:43

Thanks again!

Thanks for everyone's input, much appreciated.

In terms of pricing it is our intention to market the solution for around £4.99-8.99 per month for unlimited accounts. Remember Xero charge £3 per month per account for the data feeds from HSBC (although most other Banks are free) on top of the software costs and the £9 version with only 20 monthly bank transactions and 5 invoices is not going to be suitable for many businesses. 

 

Sheepy306 you are 100% right, some transactions will need to be reviewed but so far we have found the particular coding system we have been trialling is very accurate.

 

 

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Replying to Chris.Mann:
Stepurhan
By stepurhan
25th Apr 2014 16:11

Trial data

loguie668 wrote:
some transactions will need to be reviewed but so far we have found the particular coding system we have been trialling is very accurate.
What sort of trial data have you been using? If you have only used the program to code your own statements, whose content you can predict, then that isn't a very good test. If you have been testing it on genuine real-world data from a variety of sources then achieving a high level of accuracy becomes more impressive.

I can't help thinking that a full review is still likely to be required. If several suppliers use the same factor, how will those transactions be separated out? Business and personal expenditure may not always be obviously split. Just how big a body of payee names will it recognise? The consequences of HMRC picking up something being miscoded as deductible that isn't are too high to leave it entirely to an automated system.

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By loguie668
25th Apr 2014 20:03

Trust and accuracy

The system has been tested using real world data and the accuracy has been impressive. Would I as an Accountant still review the whole analysis before I used the data for producing Accounts? Yes, I would but I would do that with every bank analysis. If my client maintains their own bookkeeping system (Sage, Xero, etc) then I would review every code to make sure its correct. Our system pulls the data over and automatically codes it, it would then allow you to sort it by date, transaction detail, analysis code etc so you can quickly run through and identify the incorrect codings. This in my experience would still save significant time.

But this system is not just a bank reconciliation system, there will be a client facing interface where your client can login and view graphical representations of their data, they will be able to see what they are spending their money on and how much money they are getting in. They can view how much they spent on Light and Heat, for example at the click of a button. This not only gives them an easy way to track their expenses but also gets them more involved in the process and makes the whole client/accountant relationship easier and more beneficial for both parties.

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Stepurhan
By stepurhan
26th Apr 2014 11:54

Demo available?

When you say real world data, do you mean from a variety of sources like I asked? Your own bank statements would be real world data, but would not be a good test as I already pointed out. I also raised a number of problem areas I could foresee, but you haven't really addressed them. A review of client book-keeping is a different matter entirely. Whilst they sometimes make bizarre coding choices, they are at least made by a human who should know exactly what they have bought. That is a very different thing to a program just picking up payee details, which are often not even complete names, from the bank.

Is there a demo available? If not, you really need to put one together. Your claims of accuracy are key to whether this is a worthwhile package. I'd want to be able to test on some data of my choice before accepting those claims at face value. I've already pointed out some issues I expect and others have expressed scepticism in other areas. I'd love to be proved wrong, but I think you will actually need to provide some sort of proof to get sales.

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By loguie668
26th Apr 2014 16:02

.

The system has been tested on 5 bank accounts from 5 different small businesses. There is still a way to go with this.

If several suppliers use the same factor, how will those transactions be separated out? - These would have to be separated manually, although I can't imagine there would be multiples cases of this within a small business, however you are right this is a limitation.

Business and personal expenditure may not always be obviously split - No again some transactions may need to be identified as personal, at the minute there is no way a computer system can determine if, for example you've bought £50 of diesel from Tesco for your own car or for a business vehicle. 

Just how big a body of payee names will it recognise? - More or less unlimited.

The consequences of HMRC picking up something being miscoded as deductible that isn't are too high to leave it entirely to an automated system. - Again we aren't suggesting that this is something you walk in and use without any work whatsoever, it will need to be reviewed. The whole point is that as the client is getting a finance management solution they are more inclined to login and code the transactions that happened that day/week because it gives them a quick overview of what they have spent and how much they have received. Therefore the client should have already coded the factored suppliers, the personal transactions, etc as they will want the financial insights that they are seeing to be as accurate as possible.

 

cbp99 - Sorry, someone above had already answered for me that's why I didn't repost. Third party account aggregators like Yodlee. You sign up and provide your online banking credentials, they then pull the data over to our software.

 

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By EBS
26th Apr 2014 19:58

strategy

It sounds as though you're suggesting something to compete with features like 'bank rules' in Xero/Freeagent etc. to some extent. These can be time consuming and produce mixed results, so it's possible this might be a niche that would benefit from attention.

Of the systems I've come across, Money Dashboard stood out for its transaction recognition feature, although designed for the personal banking market and with the added drawback of not allowing user-input in defining the account classifications.

If you could create something to handle this problem well from a business perspective with satisfactory large-scale testing, other software providers might also be interested in it as a module to enhance their existing offerings.

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