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Running an bookkeeping firm without bookkeepers?

With the advent of bank feeds, receipt capture, autoentry has anyone estabished a workflow that.....

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With the advent of bank feeds, receipt capture, autoentry has anyone established a workflow that no longer needs bookkeepers, only accountants?
There is a slew of software applications out there promising accuracy and automation. I would be very interested in reading people's setups and experience and if the applications deliver on their time saving promises.

 

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By SXGuy
16th Feb 2021 19:26

They all help to cut down the time taken in doing Bookkeeping but they do not replace the knowledge of how entries should be handled. No software can.

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Replying to SXGuy:
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By Paul Crowley
16th Feb 2021 19:30

Agree
Bookkeeping sit hand in hand with accountancy

If technology really is the endgame then why does HMRC frustrate all who deal with it.

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Replying to SXGuy:
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By atifdarr
16th Feb 2021 19:49

But my thinking would be the opposite i.e "they do not replace the knowledge of how entries should be handled. No HUMAN can." I mean theoretically huge databases would be able to make a match better than a human, right? or am I missing something?

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Replying to atifdarr:
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By Paul Crowley
16th Feb 2021 20:27

Technology does not have human knowledge and judgement
On your thinking, why do we bother still having doctors.
What technology can determine the purpose of expenditure? If it needs to be told then that is what accountants consider to be bookkeeping.
How does it figure out that the repair was private expenditure, not business?

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Replying to atifdarr:
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By DaveyJonesLocker
16th Feb 2021 23:08

Look at how the film Blade Runner and others predicted how life would be by now and the reality. You use the word “theoretically” and therein lies the issue.

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Replying to atifdarr:
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By SXGuy
17th Feb 2021 07:33

As Paul said. Tech can't determine the difference between business and personal expenditure. In the same way it can't tell whether that £900 transaction was a revenue expense or a capital expense.

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Replying to atifdarr:
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By Andy556
17th Feb 2021 10:34

If you can find automated software that can deal with everything a bookkeeper can then let me know :)

Advertising is making people think they can just pick up software and magic happens and you've done your accounts and tax return.

I had a new client on Xero. They did the bookkeeping, I deleted the whole year and started again.
No sales entered, just receipts to the sales code. The client was complaining Xero doesn't track debtors.
No purchases entered, just payments posted to various codes.
Private payments posted to the P&L instead of directors loans.
VAT claimed on literally every payment including VAT.

Software is a very long way off being automated but it does currently speed up the process and that's about it.

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Replying to Andy556:
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By atifdarr
17th Feb 2021 10:51

Hi, in defence of software, if your client had been using the bank feed software he wouldn't have had those issues.

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Replying to atifdarr:
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By Andy556
17th Feb 2021 11:03

He was using the bank feed, that was the problem.
He used the create tab on Xero which allows you to post every single transaction direct to a nominal code.

I guess you're not an accountant or bookkeeper?

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Replying to Andy556:
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By atifdarr
17th Feb 2021 11:24

Actually I was thinking of a specialised tool such as Autoentry, but yes, you are right I am not bookkeeper. As with everything experience is the real teacher!

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Replying to atifdarr:
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By Andy556
17th Feb 2021 11:34

Autoentry just adds the purchase invoices.
The bank feed would only match if the payment was paying one invoice per payment. If they pay a statement balance you again have to manually tick the boxes of the invoices it relates to. If there's a credit note you have to apply the credit to an invoice before doing all that.

Just what a bookkeeper is there for

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Replying to atifdarr:
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By Youareatit
17th Feb 2021 12:38

[quote=atifdarr]''As with everything experience is the real teacher!''

Yeah right, thats how surgeons learn, pure experience.

Another delusional one.

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Replying to Andy556:
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By Paul Crowley
17th Feb 2021 15:53

Glad you said it

I would hate to get more bullying accusations from John

Are we looking at the inverse of the advert warning children about Social Media?

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Replying to Paul Crowley:
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By johnjenkins
18th Feb 2021 10:37

I haven't quite made it to John yet, but Tallula is nice to communicate with.

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Replying to atifdarr:
blue sheep
By NH
17th Feb 2021 11:18

How do you figure that? The feed is just a way of getting the data in.
If you mean that rules can be setup, yes but that needs a human to setup and maintain it

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Replying to NH:
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By atifdarr
17th Feb 2021 11:25

I had this in mind: https://www.autoentry.com/

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Replying to atifdarr:
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By Andy556
17th Feb 2021 11:37

That just scans invoices.

What about transactions that don't relate to invoices?
What about paying statement balances, systems can't allocate unless it's one payment per invoice without manually ticking the invoices.
What if autoentry reads the data wrong, is nobody going to check the accuracy?
What if it's a leased car with a 50% VAT restriction?
What if a private invoice gets scanned by accident?
What if about a million other things

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Replying to atifdarr:
blue sheep
By NH
17th Feb 2021 11:18

How do you figure that? The feed is just a way of getting the data in.
If you mean that rules can be setup, yes but that needs a human to setup and maintain it

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Replying to atifdarr:
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By Youareatit
17th Feb 2021 11:20

Are you having a laugh?

Rubbish in, rubbish out.

DIYers dont care though if their accounts are right or wrong, until they get stuck or worse when they are caught.

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Replying to atifdarr:
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By DaveyJonesLocker
17th Feb 2021 13:12

Is this a parody account or a fake one from one of the cloud software providers?

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Replying to atifdarr:
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By Paul Crowley
17th Feb 2021 15:49

Complete Bobbins
Autofeed is not capable of accounting decisions based on purpose

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Replying to Andy556:
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By Paul Crowley
17th Feb 2021 11:13

I no longer act but had a similar claiming VAT on VAT and wages
The spreadsheet calculated it
Worse, the client did not care saying it was his Mum's fault for putting the formula in

Another used Quickbooks but just for VAT. No other entries

Most recent co that went from spreadsheets to Sage with bank autofeed ended up with more journals than original entries
The software just could not learn
Software sellers overpromise and would win 'would I lie to you' every week

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Replying to Paul Crowley:
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By Andy556
17th Feb 2021 11:42

Haha I'd like to see a VAT inspector accept the excuse 'my mum did it'

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Replying to Paul Crowley:
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By Southwestbeancounter
17th Feb 2021 14:39

I took on a new client who had that issue many years ago - QuickBooks was calculating input VAT on VAT payments!

The VAT office knew the issue existed so had a field day when they visited!

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Replying to Southwestbeancounter:
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By Paul Crowley
17th Feb 2021 14:52

I remember a similar issue with sage on VAT
As I understood it, the output VAT was the issue and if too many transactions then it would stick at maximum number of entries. Every new entry deleted an old entry

And yes that was from a CPD course and the speaker was ex VAT
VAT at time it happened. HMRC could predict likely candidates and got some serious sums before Sage casually mentioned on website that there was an update without explaining why

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Replying to Paul Crowley:
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By Southwestbeancounter
17th Feb 2021 15:09

That's a good one!

Yes I bet VAT officers were rubbing their hands with glee with any visits involving Sage or QuickBooks at that time - especially if the visit was on a Friday!!

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Replying to Southwestbeancounter:
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By Paul Crowley
17th Feb 2021 18:27

I am not sure but I cannot think how the sage error or the QuickBooks error could possibly happen on spreadsheets or in a Collins analysis book.

Still what do we know?
MTD
if operated with style should be
Making Tax Disingenuous

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Replying to atifdarr:
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By Sue Murby
22nd Feb 2021 10:43

I think perhaps you are missing something. One of my clients received a compliance letter in January. It requested details of his dividends and salary and rental income for 2018/19.
He doesn't have a second property so I contacted HMRC. I was told that the computers had been trawling through information that HMRC had received from 3rd parties and comparing it with their tax returns. According to their records, he two overlapping mortgages which suggested that he kept his first home, bought a new one and rented out the first.

He did buy a new property but the first was sold before the purchase of the second (I've seen the contracts) and these transactions took place in 2016/17. How can the technology get it so wrong?

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By New To Accountancy
16th Feb 2021 21:48

Of course nothing is impossible and perhaps one day there may be technology that can replace humans, but at so much risk. There will be 'takers' who think that it 'is easy' so there's definitely a market, there already is. Such software could be an improvement on some work I've seen, but for Businesses who want to do it 'properly', nothing can replace a human with knowledge and experience.

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By Mr_awol
16th Feb 2021 21:58

I think there are many firms who have done it.

They’re churning out complete [***], on the whole, obviously - but hey the clients are getting a ‘silver package’ at £150 per month, so what do they care?

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By DaveyJonesLocker
16th Feb 2021 23:05

There may well be a slew of software applications out there promising what you say.

Delivering is another matter.........

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By Duggimon
17th Feb 2021 08:28

Show me the software setup that will scan in an HP agreement and put the correct entries in the books for the purchase and subsequent payments.

There will always be some human knowledge and input required for many many reasons and the adverts promising otherwise are, and this may surprise you, lies.

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blue sheep
By NH
17th Feb 2021 10:17

The problem is the gap between what can be done in theory and what actually happens in practice.

An example from this morning, a client paid his employee £350 expenses two months ago, we eventually got the information out of him that it was some mileage and some travel, some VAT some no VAT, some receipted some not. In theory you might say all of that could be captured electronically but in practice it is hard enough getting the information out of the client never mind getting them to use yet another App

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By lesley.barnes
17th Feb 2021 11:05

If we relied on the software to allocate everything correctly and just used the figures it produced I can only imagine what some clients accounts would look like. It is mind bending some of the complications clients come up with. Its down to the bookkeeper to analyse the data, question things and apply common sense to what is infront of them.
Yesterday I was looking at some bank statements 4 entries every month for insurance all with the same insurer all with identical descriptions. Me why are there four insurances going through the business? Client - one for the van, one for my car, one for my motorbike and one public liability of course. To software that would either all be allowable or all be disallowed it wouldn't know which was which.

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Replying to lesley.barnes:
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By Paul Crowley
17th Feb 2021 11:17

Spot on
Technology can figure out Who but not Why
Accounts and tax is all WHY

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Replying to lesley.barnes:
Hallerud at Easter
By DJKL
17th Feb 2021 11:18

To add even more complexity the computer can try running it via a control account, cross billing some, recovering only part of the billed, charging intercompany apportioned premiums regarding non chargeable parts, using Premium Credit re the payments and allowing for prepayments as each policy has a different end date none of which marry with the company year end- I have three pages of excel just to work out the posting allocations re our insurances each year.

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Replying to DJKL:
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By Andy556
17th Feb 2021 11:40

If a bookkeeping package could do accruals and prepayments automatically that would be amazing!!!
However it's pretty impossible and your spreadsheets will have to continue :(

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Replying to Andy556:
Hallerud at Easter
By DJKL
17th Feb 2021 13:25

I will only get really interested when it delivers coffee and chocolate digestives (or Kitcats) to my desk.(My wife has gone some way towards this, she bought me an Airpot to take to the garden summerhouse with me so that when out there I do not need to keep coming back indoors for refills)

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Replying to Andy556:
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By Paul Crowley
17th Feb 2021 15:59

Confession
I have a materiality level that gets rid of most trivial timing issues.

HMRC accept cash accounting
on Rent accounts is is the default expected by HMRC

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By Jo Nokes
17th Feb 2021 15:29

This is not exactly the question raised by the OP, but chimes with something I have been musing about for quite some time. It is the idea that countless numbers of self-employed people will be able magically to maintain their records on a computer, and moreover will be able to press a button and send information every quarter to HMRC. I have some experience of clients starting to use Xero, and it is amusing in a masochistic way to identify the various kinds of errors that they make. I was trying to compile a list of the more stupid mistakes that are made with a view to publicising them in some way. My favourite ones are:
setting up purchase invoices at the end of a quarter in order to maximise the VAT input claim, and subsequently paying the creditor as an expense payment rather than settling an invoice
posting personal tax payments to profit and loss account as taxes paid
Posting loan repayments to bank charges or bank interest, leaving the loan creditor intact
declaring VAT on grant income
I wonder how long a list we could come up with.

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Replying to Jo Nokes:
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By Paul Crowley
17th Feb 2021 16:02

You would never run out of entries to add

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Replying to Jo Nokes:
Hallerud at Easter
By DJKL
17th Feb 2021 16:08

The doubled expense was always in my experience the most common with clients and accounts software, it is easy to do even as an accountant, but at least we know to check.

Drawings to wages as they are "my wages" is another common one.

Cash guddles can go to extremes of confusing the user though these days less common as less cash to guddle.

Correcting entries were always my least favourite, post to wrong account, journal to a different one but get that wrong, second journal to correct first journal, the same number effectively playing pinball around the nominals.

Journals direct to PLCA and SLCA always bring head scratching, though software is often better at warning these days.

The client with multiple bank accounts who transfer amongst them can be wonderful to behold, throwing bank balances miles adrift when duplications arise, as they invariably do.

Or the client who does not keep backups correctly, loses their data, years ago I recall a builder on Stornoway who proudly gave me files of printouts when collecting his books, they were all very neat, nicely filed, catch was he had only printed the daybooks, no trial balances, lists of debtors and creditors, nothing like that taken from the machine and no way for him to recover the position six months earlier as at year end.

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By johnt27
17th Feb 2021 15:33

I haven't but if you wanted to do this you'd use Botkeeper

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By atifdarr
17th Feb 2021 17:21

Thank you everyone for your insights into the dark art of bookkeeping! I think it is safe to say that technology is not the answer, however most respondants have agreed that it is a time saver. Which software do you use and of those which do you find indespensible?

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Replying to atifdarr:
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By Youareatit
17th Feb 2021 17:31

''Which software do you use and of those which do you find indespensible?''

The software question is asked on here a million times a week, go spend some time and take a look around instead, whilst noting this is a forum for Accountants to swap info with each other.

If you really want help for your business, you should sit down with your Accountant and discuss what output you need from your software, that way you might get a better handle on what software will be able to help your business.

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Replying to Youareatit:
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By atifdarr
17th Feb 2021 18:20

I am planning to setup an online accountancy firm.

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Replying to atifdarr:
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By Paul Crowley
17th Feb 2021 18:37

You will be in competition with other rubbish suppliers of CHEAP services
Spend 10 minutes on research and the prices equate to minimum wage if the services are done correctly

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Replying to Paul Crowley:
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By atifdarr
17th Feb 2021 18:55

Yes, I was hoping the adoption of technology from the outset would help. I personally am an online marketer

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Replying to atifdarr:
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By Andy556
17th Feb 2021 19:36

If that is your plan to start an online accountancy practice then make sure you've got your practicing certificate, PII etc

Good job you're a marketer as it's a very crowded place so you'll do well to succeed

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Replying to atifdarr:
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By Mr_awol
18th Feb 2021 10:28

atifdarr wrote:

I am planning to setup an online accountancy firm.

atifdarr wrote:

Yes, I was hoping the adoption of technology from the outset would help. I personally am an online marketer

Couldn't make it up. See my post at 10.50 - https://www.accountingweb.co.uk/any-answers/outsourcing-year-end-account...

Sadly, this is common. Someone comes into a market they have no experience of, without any actual knowledge of the field, pitches low cost to the masses f0r a poor service (ironically the poorer the service, the lower the tax bill, in many cases - until HMRC open an enquiry at least, although these firms thrive on the basis of low probability of HMRC compliance checks) .

You could concentrate on refunds for uniformed workers and squaddies, but someone already beat you to it.

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