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Accounting & banking needs to be more joined up

27th Mar 2014
Founder & CEO Countingup
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When paying bills, too much time is wasted by small businesses transferring data between accounting software and online banking.

Some small businesses are using CSVs to do their supplier payment runs but many are manually entering individual bills from their accounting software into their online bank account.

Even if a bank provides the option to use a CSV for a payment run, there is still the need to export from the accounts and import into the bank. Then the accounts must be updated to reflect that the bill is paid.

Either way this is an inefficient approach and in my view an unnecessary waste of time for lots of small businesses for a very common administrative task.

Accounting & banking needs to be more joined up.

This is how it should work:

  1. Create a bill in accounting software
  2. Log into bank account and click a button that imports unpaid bills from your accounting software
  3. Choose the bills to pay
  4. When paid from the bank, the unpaid bill in the accounting software is automatically updated as paid

I would like to know:

  1. Has anyone seen integrations on the supplier payments side that marries up these two key services for small businesses i.e. accounting and banking?
  2. Is there a consensus that this would be hugely time saving for small businesses in the UK or do you have another view?
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Replies (6)

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By Maslins
27th Mar 2014 08:25

Banks not interested
Problem is I don't see what's in it for the banks.

Wonder whether FreeAgent/Zero have considered creating their own bank?! A massive undertaking for sure...but is it that far fetched?

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Tim Fouracre
By timfouracre
27th Mar 2014 08:48

The first few banks that do this will have a huge USP over competitors because it will be a game changing time saver for their small business customers.

With banks looking to add value to their customers beyond the most competitive rates or fees, this kind of integration would be huge for them.

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By Jekyll and Hyde
28th Mar 2014 08:39

in 2007 whilst on an auditing course...
... The lecturer discussed the risk to the profession, as part of the topic of increased audit thresholds. Most people commented about unqualified accountants. His reply was that it is not unqualified accountants that are the most risk but the banks. He mentioned that within a decade they would have automated systems to record accounting entries from the bank entries and then effectively at a click of a button financial statements can be produced all part of the monthly fee.

We still have 3 years left for his decade to elapse, however looking at today's technology and software, together with keep relaxing regulation, I can see him being proved correct.

Take the average small business, turnover £70k. Using the simplified cash basis. Seems plausible considering there could be a add on adjustments section.

Or a small business turnover £140 on flat rate scheme.

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Replying to Maslins:
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By Old Greying Accountant
29th Mar 2014 22:37

With all due respect ...

Jekyll and Hyde wrote:
... The lecturer discussed the risk to the profession, as part of the topic of increased audit thresholds. Most people commented about unqualified accountants. His reply was that it is not unqualified accountants that are the most risk but the banks. He mentioned that within a decade they would have automated systems to record accounting entries from the bank entries and then effectively at a click of a button financial statements can be produced all part of the monthly fee. We still have 3 years left for his decade to elapse, however looking at today's technology and software, together with keep relaxing regulation, I can see him being proved correct. Take the average small business, turnover £70k. Using the simplified cash basis. Seems plausible considering there could be a add on adjustments section. Or a small business turnover £140 on flat rate scheme.

... how can a bank know what the money has been spent on to produce financial statements, and how do they know what tranactions relate to what year, after all FS are produced on an accruals basis, not a cash one, plus the myriad of disclosures that need to be made that do not come directly from the bank account!

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By [email protected]
03rd Apr 2014 13:41

It may be down to the reporting

I used to get asked about this all the time when dealing with BACS payments and collections (they all end up in the BACS system at some point). Understandably, firms were looking for a report back from BACS (or the bank) that stated that a payment had been made so they could automatically post this to their accounts system. Unfortunately, the reporting currently available is only for exceptions, i.e. only the payments (or collections) that couldn't be made. General assumption is that if the accounts system creates the CSV file for payments or collections, then it should be considered 'paid'. Some firms would download the BACS exception report in an XML format and use it to reverse the status to unpaid. Considering the number of banks involved in BACS and the length of time it took to agree and implement the 1 additional field for RTI, I can't see this happening that soon. If this type of product/service were to become available, it would need to be down to each individual bank to create an accounting package bolted on to their online banking service and couldn't rely on the 'messaging and reporting'' that is used to transfer funds.

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By RedTapeDoc
09th Apr 2014 15:28

Totally agree and that’s why lots of businesses are using online systems like KashFlow. This enables all the sales and purchases made using a PayPal account to be linked to accounting.  

This is how it works:

 

PayPal is used to invoice and take payment   PayPal and MasterCard can be used for purchases   Software imports all the accounting data for you

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